Top tips for travellers on currency exchange
Many overseas travellers make the assumption that exchanging your Aussie dollars for cash in foreign currencies, like US dollars, Euros or Pounds, will be pretty much the same deal no matter which institution they choose. In reality; nothing could be further from the truth!
Even a fraction of a cent difference in exchange rates can add up to big dollars, once you multiply it over the amount of funds you want to exchange. What’s more, the method you use for purchasing foreign currencies can make an even bigger difference and fees and charges can slug you again.
So what are the key rules to go by for making sure you don’t ‘get fleeced before you fly’?
Plan ahead for big savings
The best option is to plan at least three days ahead and order your currency exchange online. This means you generally get a better exchange rate and can cut out potential commissions and fees that may apply.
Here’s an example:
Say you want to buy $2000 USD for your trip to America. After comparing some rates, Travelex Online provided the best deal at a cost of just AUD$2739. If you wait to exchange at their airport counter or local bank, you would pay AUD$2833.05.* That amounts to a hefty saving of $94.05 – enough for some fine dining at a fancy LA restaurant!
Use BPay to maximise the savings
The above example is based on paying online via BPay, which is the most cost efficient method, as Travelex will not charge fees or commission for online orders using BPAY. You simply make an online transfer from your bank account and the purchase is complete and the savings locked in.
The other good news when you purchase this way is that you can still pick up the cash at the airport, so you can avoid having to run around to get the cash beforehand.
Exchanging at the big banks may not always be the best option
Don’t assume that the banks are best
It might be reflex action to assume that the “big four” banks will have the best deals, but such an assumption could cost you money. A case in point is the example above, where Travelex Online paid via BPay was the lowest cost across 10 institutions at the time of survey. The rule of thumb is to shop around to make sure you get the best deal.
It’s also a good idea to avoid shopping centre exchange kiosks too. They may be convenient, but you will probably pay more for the privilege.
Beware of fees and charges
Currency exchange operators have two ways of making profit;
- putting a margin on the inter-bank exchange rate that they pay, and
- charging fees and commissions.
The complexity of these fee structures can make them tricky to compare, so rather than trying to sift through this yourself the best approach is to just ask for a quote from each institution. This way you will end up with bottom line figures to compare after differing exchange rates and fees are taken into account.
Don’t rely on plastic alone
Credit cards can also be more expensive. While you may see banks offering deals that say things such as “no overseas transaction fees on purchases”, they will still charge other fees such as an exchange charge - typically around 3% of the value of the amount exchanged.
Of course, no one wants to carry around all their foreign funds in cash and the security of plastic does have merits, so the best solution is usually to use a combination of cash along with a prepaid travel card and/or a credit card to optimise convenience, cost savings and security.
Using a service provider such as Travelex Online for your foreign currency cash needs can save you real $$$ with no hidden fees and competitive exchange rates, so make sure you act early and compare to get the best deal. You can start the process right here.
* Example based on rates as at 13/04/2017 as presented on bestexchangerates.com.au. Rates may vary based on current exchange rates.
What is your experience on saving money on exchange rates? Share your ideas below.