10 Currency Exchange Best Practices for all International Travelers
Lots of international travelers find managing currencies a pain. Some even find it mind boggling. In my travels, I see many people make classic currency conversion mistakes and hence lose out on their hard earned money. I have seen many get cheated too. Traveling and exploring places is something that all of us should experience and I believe that petty problems such as getting visas or managing foreign exchange should not come in the way.
To solve all your currency exchange, currency conversion or foreign exchange problems for your international travels, I have laid out 10 simple and personally tried and tested best practices that you can leverage during your future leisure or business trips. I am pretty sure that after following these best practices, your foreign exchange and international currency issues will be history.
1) Keep it simple – Don’t convert into too many currencies
In my travels, I have seen people buy a lot of US Dollars, Euros or Pounds while travelling to countries that have a different currency. This is essentially a stupid idea. I say this because, we lose 3.5% as currency conversion charge for every single conversion we make. The more the conversions, the more we tend to lose. Add to it, the local taxes and bank/exchange fees and you face a hefty loss.
Let me explain this with an example: Say, I am traveling to Thailand or Turkey, 2 popular destinations for Indians. Say, I want to convert 100 Indian National Rupees. If you convert them straight to Thai Baht or Turkish Lira, it is a single currency conversion. Hence, you lose only 3.5 INR, which means, you receive Thai Baht or Turkish Lira worth 96.5 Indian Rupees. This is a straightforward and sensible option. Now, let’s assume that you are converting 100 Rupees into US Dollars first, you get US Dollars worth 96.5 Rupees after deducting the currency conversion charge. Now, you arrive in Bangkok or Istanbul and convert those US Dollars into Thai Baht or Turkish Lira, you end up getting currency worth 93 rupees after deducting another 3.5% as currency conversion charge. I am assuming that you get the drift.
I prefer to take universal foreign currency like US Dollars only for the following: visa fees, emergency funds, countries where ATMs don’t accept international ATM cards and for transactions where I will end up paying directly in US Dollars. For everything else, I prefer converting directly to the local currency.
2) Leverage your international Debit/ATM card
For some weird reason, I see a lot of Indians not leverage their international debit/ATM cards issued by the banks in India. They still opt for hard cash. I somehow don’t see a lot of sense in this, as carrying too much cash on person always ends up compromising personal safety. Using your debit/ATM card gives you the flexibility to withdraw as and when required. Of course, you do lose out on a small amount that the bank charges as international handling fees. These fees vary from as low as 150 rupees to 500 rupees per transaction. And then, there is the 3.5% currency conversion charge that is universal and is applied even to foreign exchange offices.
To avoid hefty bank fees, I avail the following travel hacks:
a) Find your bank’s partner in the country where you are visiting and end up using their ATM: This typically leads to better exchange rates and lower bank charges
b) Instead of many small transactions, I withdraw sizable amounts, but not very heavy amounts. This reduces the percentage of my overall loss.
3) Use your Credit Card for big ticket transactions
For heavy spends and international shopping, I prefer to use my international credit card. First, they always give me a better rate and second, they have always given me the comfort factor during online or retail frauds, which are quite commonplace in many countries. And, I don’t have to fret over carrying too much cash on my person.
4) Never Exchange at the Airport
Again, a classic mistake committed by both rookie and experienced travellers. Even though everyone knows that airports provide the worst exchange rates, they still end up exchanging their money at airports. This is fine, if you do not wish to carry that small currency at the end of your trip to your home country. But, it is not at all alright to exchange large wads of cash at these counters.
This is what I recommend:
a) Convert only that amount that you desperately need (this could be for your visa fees, taxi fare or till you reach a bank or ATM in the city)
2) If you prefer cash, convert all of your money inside the city. This will always give you better exchange rates than the airport, but you will need to keep aside some time for this.
3) Even better, use your debit/ATM/credit cards. That way, you can completely avoid foreign exchange counters.
5) Use XE Currency Converter to know latest currency conversions
1 US Dollar is equal to 22,302 Vietnamese Dong. 1 USD is equal to 10,000 Indonesian Rupee. 1 Euro is equal to 35,000 Irani Rial. 1 Indian Rupee is equal to 100 Jordanian Dinar. Sometimes, currency conversions can confuse even the best of mathematical minds. I pride myself in my mathematical strength, but sometimes, I end up scratching my head too. Which is why, I love to use the XE Currency Converter (available on both Android and iOS). This XE currency converter allows me to convert 10 currencies the way I want it or the way I like it. All I need is a data connection on my phone or a wi-fi connection at my hotel or home to download the latest forex rates. XE has been a big life saver many times during my travels.
6) Never count your money in public
For someone who grew up in small Indian towns, I was always taught not to count my money in public. I take this practice into my travels, but I have seen travelers who struggle because they don’t do that. When you count your wads of cash in public, you can become an easy mark for anti social elements and this compromises safety and can lead to bad situations.
Having said that, I do recommend that you count your money properly when you exchange at banks or currency exchange offices. It only takes an extra minute to do so.
7) Opt for Forex Friendly Debit Cards or Travel Cards
In India, many banks such as ICICI Bank, HDFC Bank and Axis Bank offer pre-loaded forex cards that you can use to withdraw in many popular currencies such as US Dollar, Euro, Pound, Singapore Dollar, Australian Dollar, Canadian Dollar, etc. Transactions made using this forex card does not attract any bank charges. All you have to do is buy this card from your bank for a fixed price and you can keep topping up as required.
Do note that for countries that have currencies different from the ones offered on your forex card, it might not be useful and you might have to opt for the traditional route of cash or debit/ATM or credit cards.
8) Opt for Low Fee Travel Friendly Debit/ATM/Credit Cards
Internationally, there are many banks that offer traveler friendly Debit/ATM/Credit cards. These cards enjoy a wider bank network across the world, charge very low or sometimes even nil international transaction charges and end up giving you the best exchange rate. Generally, these cards attract an annual maintenance fee or you need to keep a higher account balance. If I were you, I would check with my bank and see if they offer anything along those lines.
9) Stay away from the Black Market
Us travelers seem to love black markets for better conversion rates. This is alright if it is your home city and you have excellent contacts. However, this might not be an intelligent option in an alien land. You might end up receiving counterfeit notes, you might be cheated in other ways or worse, you might get caught in some trouble. Stay away from the black market if you can. Or hope that your stars are shining bright above your head.
10) US Dollar is the safest foreign currency to carry
The greenback or the US Dollar is possibly the strongest travel currency. Whether you are in the developed part of the world, the developing or the really poor countries, there is always huge demand and hence great value for money for the US Dollar. It is not always the case with say Euro, Pound, Australian Dollar, Singapore Dollar, Canadian Dollar or any of those other popular and strong currencies. Personally, I always prefer to carry US Dollars with me for emergency funds, visa fees, in countries where my ATM card doesn’t work or where I intend to purchase something in US Dollars.
To solve all your currency exchange, currency conversion or foreign exchange problems for your international travels, I have laid out 10 simple and personally tried and tested best practices that you can leverage during your future leisure or business trips. I am pretty sure that after following these best practices, your foreign exchange and international currency issues will be history.
1) Keep it simple – Don’t convert into too many currencies
In my travels, I have seen people buy a lot of US Dollars, Euros or Pounds while travelling to countries that have a different currency. This is essentially a stupid idea. I say this because, we lose 3.5% as currency conversion charge for every single conversion we make. The more the conversions, the more we tend to lose. Add to it, the local taxes and bank/exchange fees and you face a hefty loss.
Let me explain this with an example: Say, I am traveling to Thailand or Turkey, 2 popular destinations for Indians. Say, I want to convert 100 Indian National Rupees. If you convert them straight to Thai Baht or Turkish Lira, it is a single currency conversion. Hence, you lose only 3.5 INR, which means, you receive Thai Baht or Turkish Lira worth 96.5 Indian Rupees. This is a straightforward and sensible option. Now, let’s assume that you are converting 100 Rupees into US Dollars first, you get US Dollars worth 96.5 Rupees after deducting the currency conversion charge. Now, you arrive in Bangkok or Istanbul and convert those US Dollars into Thai Baht or Turkish Lira, you end up getting currency worth 93 rupees after deducting another 3.5% as currency conversion charge. I am assuming that you get the drift.
I prefer to take universal foreign currency like US Dollars only for the following: visa fees, emergency funds, countries where ATMs don’t accept international ATM cards and for transactions where I will end up paying directly in US Dollars. For everything else, I prefer converting directly to the local currency.
2) Leverage your international Debit/ATM card
For some weird reason, I see a lot of Indians not leverage their international debit/ATM cards issued by the banks in India. They still opt for hard cash. I somehow don’t see a lot of sense in this, as carrying too much cash on person always ends up compromising personal safety. Using your debit/ATM card gives you the flexibility to withdraw as and when required. Of course, you do lose out on a small amount that the bank charges as international handling fees. These fees vary from as low as 150 rupees to 500 rupees per transaction. And then, there is the 3.5% currency conversion charge that is universal and is applied even to foreign exchange offices.
To avoid hefty bank fees, I avail the following travel hacks:
a) Find your bank’s partner in the country where you are visiting and end up using their ATM: This typically leads to better exchange rates and lower bank charges
b) Instead of many small transactions, I withdraw sizable amounts, but not very heavy amounts. This reduces the percentage of my overall loss.
3) Use your Credit Card for big ticket transactions
For heavy spends and international shopping, I prefer to use my international credit card. First, they always give me a better rate and second, they have always given me the comfort factor during online or retail frauds, which are quite commonplace in many countries. And, I don’t have to fret over carrying too much cash on my person.
4) Never Exchange at the Airport
Again, a classic mistake committed by both rookie and experienced travellers. Even though everyone knows that airports provide the worst exchange rates, they still end up exchanging their money at airports. This is fine, if you do not wish to carry that small currency at the end of your trip to your home country. But, it is not at all alright to exchange large wads of cash at these counters.
This is what I recommend:
a) Convert only that amount that you desperately need (this could be for your visa fees, taxi fare or till you reach a bank or ATM in the city)
2) If you prefer cash, convert all of your money inside the city. This will always give you better exchange rates than the airport, but you will need to keep aside some time for this.
3) Even better, use your debit/ATM/credit cards. That way, you can completely avoid foreign exchange counters.
5) Use XE Currency Converter to know latest currency conversions
1 US Dollar is equal to 22,302 Vietnamese Dong. 1 USD is equal to 10,000 Indonesian Rupee. 1 Euro is equal to 35,000 Irani Rial. 1 Indian Rupee is equal to 100 Jordanian Dinar. Sometimes, currency conversions can confuse even the best of mathematical minds. I pride myself in my mathematical strength, but sometimes, I end up scratching my head too. Which is why, I love to use the XE Currency Converter (available on both Android and iOS). This XE currency converter allows me to convert 10 currencies the way I want it or the way I like it. All I need is a data connection on my phone or a wi-fi connection at my hotel or home to download the latest forex rates. XE has been a big life saver many times during my travels.
6) Never count your money in public
For someone who grew up in small Indian towns, I was always taught not to count my money in public. I take this practice into my travels, but I have seen travelers who struggle because they don’t do that. When you count your wads of cash in public, you can become an easy mark for anti social elements and this compromises safety and can lead to bad situations.
Having said that, I do recommend that you count your money properly when you exchange at banks or currency exchange offices. It only takes an extra minute to do so.
7) Opt for Forex Friendly Debit Cards or Travel Cards
In India, many banks such as ICICI Bank, HDFC Bank and Axis Bank offer pre-loaded forex cards that you can use to withdraw in many popular currencies such as US Dollar, Euro, Pound, Singapore Dollar, Australian Dollar, Canadian Dollar, etc. Transactions made using this forex card does not attract any bank charges. All you have to do is buy this card from your bank for a fixed price and you can keep topping up as required.
Do note that for countries that have currencies different from the ones offered on your forex card, it might not be useful and you might have to opt for the traditional route of cash or debit/ATM or credit cards.
8) Opt for Low Fee Travel Friendly Debit/ATM/Credit Cards
Internationally, there are many banks that offer traveler friendly Debit/ATM/Credit cards. These cards enjoy a wider bank network across the world, charge very low or sometimes even nil international transaction charges and end up giving you the best exchange rate. Generally, these cards attract an annual maintenance fee or you need to keep a higher account balance. If I were you, I would check with my bank and see if they offer anything along those lines.
9) Stay away from the Black Market
Us travelers seem to love black markets for better conversion rates. This is alright if it is your home city and you have excellent contacts. However, this might not be an intelligent option in an alien land. You might end up receiving counterfeit notes, you might be cheated in other ways or worse, you might get caught in some trouble. Stay away from the black market if you can. Or hope that your stars are shining bright above your head.
10) US Dollar is the safest foreign currency to carry
The greenback or the US Dollar is possibly the strongest travel currency. Whether you are in the developed part of the world, the developing or the really poor countries, there is always huge demand and hence great value for money for the US Dollar. It is not always the case with say Euro, Pound, Australian Dollar, Singapore Dollar, Canadian Dollar or any of those other popular and strong currencies. Personally, I always prefer to carry US Dollars with me for emergency funds, visa fees, in countries where my ATM card doesn’t work or where I intend to purchase something in US Dollars.
