It’s been a tumultuous two years for international travel, but now as countries are slowly looking to welcome back foreign visitors, and some completely scrapping COVID-19-related travel protocols, this year is looking to be one of the biggest and best years in travel.



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While it may seem under current conditions that international travel should be avoided at all costs, or partially, many Americans who’ve managed to save up enough are now eager to finally get away and spend their summer abroad. With an eagerness to travel and immerse themselves in a completely foreign culture, roughly 65% of surveyed travelers stated that they will be spending more this year on international travel than they have in the last 5 years.

The tourism industry has already shown signs of recovery, making a slow comeback in 2021, with roughly 15 million more international passenger arrivals than in 2020, according to the United Nations World Tourism Organization. But this year is expected to look even bigger, even if the cost of travel is now a bit higher than what it was pre-COVID.

Ways To Save On Foreign Exchange Without Paying Massive Fees

It’s an exciting time to finally be able to get back in the air and visit a destination that you’ve never experienced before, and while the joys of traveling can come with a lot of planning, booking, and timekeeping; one aspect many travelers seem to leave until the very last minute is their foreign currency exchange.

Exchanging your cash before leaving for your holiday destination might not always be on the top of your pre-departure to-do list, with all the online banking apps and services already available, why would it be necessary to go do a foreign currency exchange?

While these services and banking platforms have made our lives immensely convenient, helping to connect us to the globalized economy, it’s important to familiarize yourself with foreign exchange and how it works before you set off.

What is Foreign Currency Exchange?

Without sounding too technical, foreign currency exchange, sometimes referred to as forex, is the conversion of one base currency to another. For example, if you’re traveling from the United States, your base currency will be the US Dollar or USD. If you’re planning on traveling to South Africa which uses the South African Rand or ZAR, you will need to convert your base currency (USD) into the country’s quote currency (ZAR).

Usually, the currency you already work within your origin country is always referred to as the base currency, and while some countries may use the same type of base currency, it’s the same for most other instances. For example, there are around 170 different forex currently being traded in the world, so it’s important to know what currency your destination country uses.

How Does Foreign Currency Exchange Work?

Although we’ll cover some of this a little bit down in the article, it’s important to get a basic understanding first. The process works by swapping or converting one legal tender to another. These legal tenders, or forex, are usually paired with one another for example USD/ZAR; USD/EUR; GBP/EUR. The exchange rate between each of these various pairs depends on global market fluctuations, so it’s not always to say that you will get a 1:1 ratio for your exchange.

When you do a foreign currency exchange with a set amount, you will receive the amount in the quote currency (or currency that you’re converting to) based on the day and time of exchange. This is solely based on the exact time of exchange and how the forex market may have been trading at the time. For example, the USD is almost 15 times more valuable than the South African Rand (ZAR). Meaning, for every USD$1 you exchange, you will receive around ZAR15 in return. These calculations are simply based on average trading prices and market fluctuations.

Now that you have some basic insight into how foreign currency exchange works, and why it’s important, let’s dive into the 5 ways you can save money on your international trip this upcoming holiday.

Exchange Your Cash Before You Leave

With so many online banking tools and apps currently available, it sounds almost ancient to have cash on hand when you’re looking to travel. While this might not be the most modern way to do things, having cash before you leave your origin country is the best thing you can do.

Before you can convert your dollars into another currency, you will need to check what currency is being used in the country you’re traveling to. In most cases, some European nations will most likely use the Euro, but that’s not true for all of them. Not all Scandinavian countries use a universal currency or the Euro, and the Australian Dollar is not the same as the American Dollar. It’s best to research what the local currency is beforehand so that you don’t run into any problems with your local bank or exchange merchant.

Now, exchanging cash before you leave is not only the best option, it’s also the most cost-effective option. When you exchange your USD at your local bank or forex exchange merchant, there’s a good chance you’ll get the best possible value for your conversion.

Some banks offer anywhere between 70 to 100 different foreign currencies, making it the most suitable and affordable option. More so, most of the time, banks might add a smaller commission percentage or nothing at all on the amount that you’re exchanging into. Luckily now that everything is digital, you can order your currency online, by phone, or book an appointment at your local bank on their website. Of course, it’s advised to first contact your local bank before ordering any currency, and if you’re in a rush, or forgot to make the exchange, you can always make use of a forex exchange merchant or Bureau de Change in your destination country.

Look for the Best Exchange Rate

As earlier explained, the exchange rate is the amount of foreign currency you will get for every USD$1 you convert.

So with this, it’s important to look for the bank or a financial merchant who will offer you the best possible exchange rate, not only will you perhaps get more value for your money, but it will also help to save a bit on exchange fees.

If you don’t manage to make the exchange before you leave, you can make use of other means within your destination country. ATMs might be easily accessible, but there are fees and withdrawal costs that come along with them. It’s advised to make use of an ATM only when you’re in dire need of cash, or if there is no other method of foreign exchange available.

Note that when withdrawing cash from a foreign ATM, the fees you are charged can either be from your bank or the foreign ATM issuer. It may be possible that your bank can have a flat fee per withdrawal, and if you’re able to withdraw from your local banks’ ATM in a foreign country, there’s still a fee or cost attached for using an ATM out of network range. Usually, your bank or foreign exchange merchant will offer you the best exchange rate, while giving you the added benefit of security, knowing that the money came from a trusted source.

Don’t Use Foreign Exchange Kiosks or ATMs at The Airport

Steer clear of making use of foreign exchange kiosks or ATMs at the airport, while they may offer a sense of convenience, it comes with a price. Some exchange kiosks are notorious for charging higher transaction and exchange fees than your bank or other forex merchants simply for being more convenient and easily accessible. While this might not be the case for every kiosk or ATM placed in an airport, there’s a slight chance that you’ll end up paying roughly 20% to 30% more on your currency exchange.

While your bank may have given you ZAR1500 for your $150, the ATM or kiosk may now only give you ZAR1410 (or less) for the same $150 exchanged. And yes, perhaps this may not seem like a lot of cash at the time that you’re losing, the more you exchange, the quicker it starts to add up. Some of these ATMs may always charge high transaction fees on international bank cards, even those that claim to be “fee-free” or offer the best type of exchange deal, you’re better off exchanging your cash back home, or simply keeping it on your credit or debit card.

As a tip: Try and avoid ATMs that are placed in high tourist areas, while they may be there at the right place, and perhaps at the right time, you’re bound to end up paying more on transaction fees and withdrawal costs.

Limit Using Your Credit or Debit Card

It’s also possible that you can pay for your holiday in your destination country by using your credit or debit card. This is one of the best ways to travel, as it helps to secure your cash, and you don’t end up walking around with hundreds or even thousands of dollars worth of foreign exchange. While paying with either a credit or debit card, some banks, and financial institutions may offer a forex debit card, which allows you to transfer cash into the account, and make use of the card in the country you’re traveling to. Depending on who you bank with, you may be eligible for a forex card, or you can simply arrange for your bank to activate your current account so that it can be used in a foreign country.

Yes, it’s possible that you can use your US bank card abroad, but it does come with a bit of a catch. Some banks can charge anywhere between 1% and 3% transaction fees when using your bank card abroad, and while this might not sound like a lot of cash right now, when traveling on a budget this can easily add up. When using your credit or debit card abroad it’s best advised to arrange with your bank beforehand, as they will have more information on what the impending transaction fees might be, and also how much your swipe or withdrawal limit may be.

Always read the fine print, as this will give you a better idea of what you’re set to pay per transaction, and how it will be billed. In some instances, banks may pause charges on your card while abroad, and post you a bill once you’ve returned. There are a lot of small surprises that come with using your credit or debit card abroad, and it’s safe to say that while it’s one of the more suitable options, it’s advised to read the fine print thoroughly or talk to your banker.

Avoid Dynamic Currency Conversion

Because our world is now more globalized and digital than ever, there’s a slight chance you will come across, or already have come across dynamic currency conversion when traveling.

What is dynamic currency conversion you might ask?

In some places, when paying for a meal or tickets by card, the merchant’s point of sale machine might give you an option to either pay in the local currency or perhaps in US dollars. While it may seem like the best option to pay in US dollars, as it might look cheaper, it’s not always the case. Dynamic currency conversion does make the conversion a bit easier, but paying in the local currency is the best option you have. Always go with the local option, as most of the time, there are hidden exchange rate fees and transaction costs involved – sometimes even both of these are charged at the same time. While it may seem obvious to work in USD, educate yourself on the prices and the money before you leave, as this is something you’ll come across on your next trip.

There are however those instances were paying in USD might work out cheaper, or it’s perhaps the only option available – in this case, you can select the option to pay in US dollars, but always keep tabs on how often you’re doing this, and how much the fees may be accumulating throughout your visit.

Some Noteworthy Tip To Keep In Mind

Make use of foreign or international banking apps

Nowadays, your bank might be able to offer you a foreign exchange service that’s preloaded on your banking app or profile, if not, make sure to check in with your bank before you leave.

These apps and platforms allow you to pay for expenses while on your trip. It’s also a smarter and safer way to travel, as you don’t require carrying cash around.

International banking apps can also automatically exchange your cash before you use it, and you will have access to view the current exchange rate before doing a transaction.

Avoid Costs and Fees As much as possible

It’s not at all possible to avoid transaction fees and withdrawal costs while traveling abroad, as these are pretty standard, but it is possible to minimize your exposure to them while traveling. That’s why it’s best advised to either exchange your cash before setting off, or get a forex credit or debit card from your local bank. These cards offer lower transaction fees and can be used in a variety of countries.

Notify Your Bank

If you’re looking to travel soon, it’s advised to inform your bank in case of an emergency or if any suspicious activity is picked up on your bank account during your travels. Informing your bank about your travel plans can also help you find out more information regarding foreign exchange, possible member discounts, and rewards, or any cards you might require.

Additionally, the bank will also be able to inform you about your daily transaction and withdrawal limits, so that in case you run into a problem abroad, you can increase it without them flagging suspicious activity. It’s best to inform your bank, as to ensure your bank account can be used at your holiday destination.

The Bottom Line

Traveling comes with a lot of planning, and foreign currency exchange should be one of your top priorities before leaving. Always make sure that you research the country that you’re going to, and see what the local foreign currency is. Try to avoid unnecessary costs and fees by exchanging your cash before you leave, this way you will already have the cash in your hands by the time you land, or in case of an emergency.

Simply work smarter with your foreign currency, and most importantly, enjoy your holiday.

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