Don’t lose money changing money
When you are traveling, one of the more important technical aspects of your trip is money. You will want to be able to buy goods and services wherever you go, and that means converting your dollars into the local currency of wherever you decide to travel. Travelers often ask if their money should be converted when their trip is booked, or when they actually set foot in their destination. It doesn’t really matter truthfully—currencies don’t fluctuate that much, and the difference is usually less than one percent.
What does matter is where you choose to exchange your currency at. There are a few convenient options. You can exchange money abroad, but the transaction fee might be quite high. Foreign banks know that there is no other easy way for foreigners to exchange their funds, so the rates might not be what you expect.
Exchanging your money at a local bank might be a better option, but you have to make sure that you keep enough money to cover costs until you reach your destination. Make sure to check the exchange rates online or in your local paper before making a transaction so that you know you are being quoted the right price. Still, local banks are still a low-cost and relatively convenient option.
Today, you can even choose to exchange your funds at hotels or airports while you continue on your trip toward your destination. Exchanging your funds at these places is definitely more convenient, but you pay the price with high transactional charges. The markup is significant, so you only want to use these convenient options as a last resort, not as a planned first option.
Another newer option is exchanging money via credit cards. Credit card companies tend to get better conversion rates than individuals do, so it can be a desirable option. However, the conversion doesn’t always take place instantly, and if your home currency is falling, you might end up with a little less cash than you thought.
An older but still fairly popular option is to use travelers checks. Travelers checks can be replaced even if they are lost or stolen and they can be used for free at exchanges to obtain the currency of the country you’ve traveled to.
There are even online services that take your American funds and then mail you converted currency. However, there is a significant risk of safety and fraud here so it isn’t advised unless the other options aren’t available. You don’t want your funds getting lost in the mail or stolen by someone within the postal system.
Choosing which conversion method to use depends on your travel plans and personal preferences. But traditionally, you want to keep your risks and costs low. If you are in a bind, you might choose a more convenient option such as a hotel or airport conversion. The best way to travel financially sound is to make a plan beforehand and stick to it. Many expatriate insurance providers will be able to advise on the best ways to plan for a long-term trip abroad. Make sure that you can avoid the high transactional costs and you’ll enjoy your trip without any surprises.
