Here is how to save on currency exchange rate!
Are you planning to Intern Abroad, Study Abroad, or Volunteer Abroad? Have you thought about the local currency and how much of it you will need while abroad? To eliminate all the hassle and worries that you might have, Link To Diversity created this article to help you prepare for your program abroad.
Whether you are going to Europe or Philippines, knowing current market exchange rate is a plus. No matter whether your home currency is stronger or weaker, you absolutely have to research at least a little bit about the relation between the two. What is the lowest that your home currency (i.e. USD) sold for against the local currency (i.e. EUR)? What is the highest exchange rate that it has been? What is the current rate? What is the fair price to exchange the two currencies at? You have to learn all of these facts before you go abroad to avoid being ripped off by local vendors and currency exchange booths!
Here is a list of things that you need to know about exchange rates:
#1. Be sure to know current exchange rate!
Just we said in the introduction – you have to research the exchange rate between the two currencies to be able to know the current rate and determine whether it is fair or not. You can always find good currency data on Bloomberg or XE websites. They show current exchange rate without any markups and commissions. You are less likely to see this rate in banks or exchange kiosks as they all have their own rate that they use. While abroad, make sure you know market rate to know how much of a mark-up these guys have. Sometimes the rate is way too expensive, so you would want to look for a different source. Street vendors are usually very cheap, but you really have to be careful as there are also a lot of scammers who will rip you off and steal from you. It is best to put your safety first before saving a couple of bucks here and there.
#2. Talk to your bank before your departure!
A lot of the time banks will use a different exchange rate when you use your credit or debit card opposed to the rate that they will offer you when ordering currency at their branch location or through their foreign exchange services. Talk to your accountant executive at the bank and ask about international transactions and their fee schedule. A lot of the times, when using Visa or MasterCard you will get a very reasonable price that will not require cash exchange. This is also a safe way to travel because you don’t have cash available on you. Be careful about this though! A lot of the banks will charge certain percentage fee for every withdrawal and purchase that you make. At the cash machine (ATM) you might end up paying your bank for international transaction and on top of that pay local bank a percentage of the amount for using their ATM –very tricky and gets very pricy to! But knowing the exchange rate that you can get while abroad will always help with deciding on what to do.
#3. Create your travel budget!
Planning is the key to having a successful program abroad. Once you know exactly how much money you need to take with you abroad – everything else falls in its place. For instance, doing a currency exchange is much cheaper in a large city than in a small town. Thus, if you planned it ahead of time, you will do the exchange while you are in a large city and then go to a smaller city where your program location is at. If you don’t plan, you will end up overpaying when you arrive at your project site. Being organized really pays off! Also, when you have a clear schedule of what and when you are doing it (visiting a museum. Or going on a bus tour, or shopping…etc.) you can plan it so that you spend most of your money at the end of your program. When you do that, it is most likely that you will save money, have a less stressful stay during your placement, and will have much more fun towards the end and will leave the program happy and full of joy. On the other hand, when you spend your money in the beginning, you might have unexpected expenses that will stress you out and will make your stay not as joyful. All smart travelers get the kick out of their trips at the end because it provides best memories ever! Those who spend all their money upfront, come home unhappy, exhausted, and create trouble for their international program providers as if they are at fault for not providing a fun program abroad. Think twice, and organize yourself!
#4. Do not exchange at the airport!
Have you ever seen foreign exchange booths at the airport? Never exchange at these booths! These booths are targeting people who are in emergencies, need currency quick, or simply not educated enough. Their rates a way high and they will rip you off big time. You will overpay by at least 7%-10% of what you would have paid when exchanging at a different location. Just stay away from these if you want to save money.
If you end up exchanging money at a kiosk or some other street vendor while you are abroad – negotiate a better deal. These kiosks and street vendors are usually located by local markets and bazaars where people negotiate all the time. In some countries people negotiate everywhere! It never hurts to try it if it can save you some money. This is another reason why you need to do your research. The more you know, the less room there is for someone to fool you. In the worst case scenario (this almost always helps) just say that you have seen a lower rate just couple minutes away somewhere nearby, these guys are eager for business and they will exchange at the price you are asking if you are being reasonable.
#6. Do your research about your destination!
Some of the countries will use USD as one of the currencies that you can use to pay for stuff. Know it ahead of time and maybe you won’t have to deal with currency exchange at all! Before you use dollars in any particular country, be sure to know the exchange rate with the local currency ahead of time because you may end up paying more than it is actually worth. Having a calculator is always useful!
Remember that a lot of hotels and malls will provide currency exchange with very good rates – try using them first!