Exchanging Currency at the Right Time Can Stretch a Travel Budget

When is the right time to exchange a currency?
Some international travelers wait until they arrive at their final destination before they exchange currency. Business travelers may not have enough time to deal with exchanging money before they get on an airplane for several reasons. Vacation travelers on the other hand, usually have enough time to exchange currency in an effective way, meaning they can keep the cost of exchanging money to a minimum by averaging their exchanges before they leave home. Let’s say you live in Japan and you are flying to Hawaii for nice and relaxing vacation. You wait until you arrive on the Big Island to exchange money and realize that the Dollar has surged in value overnight, which it has been known to do. Just a 1200 point surge can cost you an extra ¥1200 for every ¥10,000 you exchange, if you are exchanging Yen for Dollars. That’s a budget breaker by anyone’s standards.

The most effective way to save money when you are exchanging currency is by averaging your exchanges while you’re planning the trip. When you exchange small amounts of money at different times before you depart, you offset any major value surges. You know exactly how much each exchange costs, so your budget is more accurate. Averaging is especially important if you are on an extended vacation because there usually is more money involved and there’s a greater chance for market fluctuations.

Where should I exchange my money?
If you ask a banker, the answer is a bank, but banks are not the most economical way to exchange money. They charge a fee which can be 3% or more and they may only post one or two rates a day, which means you may not get a real time rate and that can be expensive. Credit card companies make up their own exchange rate which includes a built-in profit and they add a surcharge to every credit card purchase, so you never know how much you’re spending until you get your statement and that is never good news. Airport exchange merchants add a commission to their posted rate, so you should only use them when it is absolutely necessary.

A currency broker will help you average your exchanges. A broker will notify you when an exchange pair is in your favor so you get the best rate of exchange and you don’t over pay in the process. Currency brokers do make a couple of points when you exchange money with them, but you’ll still save money in exchange costs when you use one.

Other travel tips
Most countries set a limit on the amount of cash you can carry through customs. Do some research and stay within the limit. Always carry cash in a hidden pocket or in a money belt that’s secure and out of sight. Use hotel safes and other security measures when you arrive at your destination and remember that common sense is your best security weapon when you use it.The currency trading market can be very volatile so it’s important to fully understand it before attempting to trade on a regular basis. ForexTraders.com wants you to be the best trader you can possibly be, so make sure to visit the site for a free course, forex broker reviews and endless articles on strategies and analysis.