Introduction to saving money when changing from one currency to another
Money lost in foreign currency conversion is mostly gone unnoticed by most of people travelling abroad. Even frequent international travelers are ignorant about ways to save money while converting foreign exchange. A traveler can lose any thing between 4% to 10% when converting one currency to another, based on the method used for the conversion of money.
The biggest culprit is ignorance or misinformation provided by middlemen engaged in currency conversion trade. Travelers choose credit cards or other methods to change money in another currency solely out of habit or influenced by advertisement available at airports, travel websites or banks.
Money can be converted by buying foreign currency from the bank or forex dealer in the home country or abroad. In addition, credit cards, stored value forex debit cards, bank debit cards, travelers checks, bank drafts can be used for changing money from one currency to another. Choice of method used for exchange of domestic currency should ideally be decided by answering following questions:
How much money do I need to convert?
What is the length of my total stay abroad?
Do I plan to travel to one country or multiple countries? What will be duration of stay in each of the country?
What is the minimum amount of cash I would absolutely need at each location?
It is also influenced by individual preference for cost saving, convenience and safety. Generally convenient or safer methods will cost more to convert foreign currency. Let’s examine following most popular methods for converting one currency into another and cost / convenience associated with them.
Prepaid / stored value travel cards
International debit cards
International credit cards