If you are planning to travel abroad, you have probably come across the term “foreign currency conversion.” Foreign currency conversion is the process of converting your home currency to the currency of the country you are traveling to. Here are 6 things to know about currency conversion before you travel.
6 Tips on Currency Conversion for International Travel
Understand what the exchange rate is.
The exchange rate is the ratio between currencies from two different countries—for example, your home currency and the local currency of the place you are traveling to. If you are traveling from the US to India, the exchange rate may be expressed as follows:
$1: INR 81.37
This means that for every US dollar you exchange, you’d receive 81.37 Indian rupees. It’s important to keep an eye on how the exchange rate is moving so that you can exchange your money at the right time to get the best possible rate.
Factor in currency conversion fees.
Whenever you exchange one currency for another, there is a cost involved. This is known as the currency conversion fee and can vary considerably from one foreign exchange specialist to another. Check how much the fee is before you exchange your currency because this can have a huge impact on the amount you receive..
Buy currency before you travel.
When you are traveling to another country, you can exchange some of your money before you leave home. Doing so gives you time to shop around for the best rate. Plus, when you arrive, you won’t have to immediately find a bank or currency exchange. Do some research ahead of time to see if US dollars are widely accepted at places you plan to go to. This could minimize your need to exchange currency.
Send money ahead to your destination.
If you want to make currency conversion really easy, you can send money to a Western Union location that’s near where you will be staying. When you arrive, you can pick up the money in the local currency. You can use the online Western Union currency converter to get an estimate of how much you might receive factoring in the exchange rate and any other fees, and you can make the transfer right from your phone using the Western Union money transfer app.
Bring some US dollars with you.
Even if you think you won’t need much cash, it may be worth having some US dollars in cash with you just in case you run into trouble with your bank account, debit card or credit cards when you arrive at your destination. An alternative is a prepaid currency card which you can load up with local currency and use it like a debit card. If you load up before you travel, you’ll lock in the exchange rate, which can help if you need certainty over your budget. You can also store money in US dollars on the card and then when you spend, the provider will convert at the prevailing rate of the day. The advantage of a prepaid card over cash is that you can get your money back if your card is lost or stolen by informing your provider as soon as possible.
Access local currency when you arrive.
If you do need to get local currency when traveling or on arrival, it’s best not to use airport exchange kiosks as these tend to have higher currency conversion fees and less favorable exchange rates. You can use your debit card at an ATM to withdraw cash but be careful that your bank doesn’t charge excessive fees. Check the fees charged by your debit card provider and consider whether it’s worth getting one that doesn’t charge any currency conversion fee. If you plan to use your credit card for purchases, be sure to find out what fees your carrier charges and then compare with alternate methods of currency conversion. This includes cash advance fees—credit card companies will often allow you to get a currency cash advance, but fees can be high.
