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How to get the most of your money when traveling
How to get the most of your money when traveling
By Victor Siu
When traveling to another country, there are several key ways to get the most out of your money. Among the most effective methods is timing your travel right: taking advantage of a favorable exchange rate can considerably enhance your buying power. In the real world, though, a plethora of arrangements to be made and tickets to be bought may inhibit the luxury of planning travel months in advance. But even if you're planning your travel just a month or even a week in advance, there are still ways to be smart about your money. To minimize losses when converting to another currency, finding a good place to change your money is key.
Long-Term Planning
Plan to travel when your money is worth relatively more in the country you are visiting. Every country has a fluctuating exchange rate so that there is balance in the supply and demand of currency. Timing your travel correctly, therefore, can make a significant difference in the amount of spending you do.
A clear example of a fluctuating market is the euro to US dollar exchange rate. In year 2002, each euro was worth $.83. Now, in July of 2005, each euro is worth an upwards of $1.2059, meaning the euro increased more than 31% in three years. This favorable rate of exchange for the euros makes traveling to the US a much more favorable deal in 2005.
Two ways to see if traveling to another country is a good deal, then, are to look at historical data and anticipate the future. You can easily check the historical rate of a currency pair by visiting a foreign exchange news site and pulling up a yearly chart. A good website for this is DailyFX (www.dailyfx.com). Having an inkling about the future direction of the exchange rate may prove more challenging, but it is not impossible. DailyFX has fundamental and technical news reports to guide you in this respect.
Short-Term Planning
When travel plans are made in the short term, the key to maximizing buying power is finding the right place to change your money - that is, getting the best rate for the time that you are traveling. It is essential to do research in advance, namely, checking the rates at domestic banks, credit cards, foreign banks, and ATMs.
At Home
At home, you can contact your local bank teller and ask about changing your money to a foreign currency. Experts suggest to only change enough to cover travel costs until you are settled at your destination though, as the costs of exchanging money at home can be prohibitive. Another service available is an online money exchange, which will take your funds and send the converted money to your home.
The risk posed in this service is the safety of your funds during transportation.
In most instances, asking your credit card representative about exchanging money is the best approach to getting a great exchange rate. Credit card companies have access to better rates than individuals and often deal in more than one currency. One precaution to take, nonetheless, is to check if your home currency is losing value, since not all transactions are converted instantly. Be cautious of the possibility of receiving a lower than expected rate several days later.
Abroad
While exchanging money after arriving to a foreign country is the most convenient option, the obvious risk is the lack of options. The quoted exchange rate given may be determined purely by supply and demand, meaning that you will end up with a price close to what is being quoted in the foreign exchange market globally. The government of the country you are visiting sets the currency exchange rate, which must be offered by anyone who is changing money; and a mark-up in the rate is inevitable. An easy way to see if changing money in a foreign bank is a favorable decision is to compare currency rates beforehand in a local newspaper.
ATMs of a foreign country may also be a convenient way to obtain local currency at a reasonable rate. Keep in mind, however, that your withdrawal may be subject to a fee from both the foreign and your local bank. Another precaution to take is to tell your bank of your travels, as they often freeze cards if out of the ordinary transactions take place. As an illustration, if you make withdrawals in four different countries over the course of a week, your bank may see this as a red flag and for security, immediately lock all transaction of funds.
Getting The Most Out of Your Money Now
Getting the most of your money is a tricky task if you are unaware of all the options, or have trouble finding good resources. A quick and easy way to decide which of these options are right for you is to firstly, talk to as many people as you can (such as your local bank teller and credit card company), and secondly, obtain rates from the listed options and compare the quotes with one another. As another alternative, you can compare your obtained rates with the market rates quoted at GoCurrency.com (www.gocurrency.com), a currency converter that offers up-to-date exchange rates for over 150 world currencies.
About the Author
Victor Siu is a contributing writer for GoCurrency.com. GoCurrency provides information on global exchange rates, movements and news related information.
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