When traveling abroad, one of the most important things to consider is currency exchange. You are visiting a country that uses a different currency from the one you use back at home. Theirm money is different from the one you are used to. For this reason, having the currency that will allow you to transact in your destination is a must. While changing the local currency to the foreign currency, getting the best exchange rates and avoiding unnecessary fees can help you save money. It can also make your trip smoother.
Whether you’re heading to Dubai for a shopping spree, South Africa for a honeymoon trip, Europe for a business trip, or the USA for a vacation, understanding how to exchange currency efficiently is essential.
In this guide, we provide tips and guidance all those traveling abroad about currency exchanges. We shall explore the best practices for exchanging money, avoiding scams, and making the most out of your travel budget.
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1. Understand the Exchange Rate Before You Travel
What is Foreign currency exchange?
In very simple terms, it is the process of converting one currency into another.
At a higher or institutional level, currency exchange enables different countries to conduct cross-border or international trade. It is also useful for investors who need to do business out of their countries.
At personal level though, it allows individual travelers – tourists, students, pilgrims or businessmen (and women), mercenaries, etc – to receive and enjoy the seemingly mundane services with ease while visiting a foreign country.
It is very important to keep in mind that exchange rate between any 2 currencies is never static. It fluctuates almost constantly. The fluctuation is as a result of market demand, economic conditions, and geopolitical factors, among many others.
Before exchanging your money, it is very important to know the current exchange rate of the day. This knowledge can help you determine if you’re getting a fair deal or not.
To get an idea of the prevailing rates, you could check exchange rates through:
Pro Tip: Currency exchange rates fluctuate daily, so it’s wise to monitor them in the weeks or days leading up to your trip.
2. Exchange Some Money Before Leaving Home
While you are likely get better exchange rates abroad in some cases, having some local currency upon arrival at your destination is essential for immediate use like airport trolley rental, taxi from the airport, tips, or emergencies. For this reason, we advise that you do the following:
- Exchange a small amount at reputable forex bureaus in your town.
- Avoid exchanging at the airport, as rates tend to be higher.
3. Use ATMs Wisely Abroad
Automated Teller Machines (ATMs) are without doubt one of the most convenient ways for travelers to access local currency. However, from experiences shared by our past guest, you should:
- Use bank-affiliated ATMs to avoid excessive fees.
- Withdraw larger amounts at once to minimize transaction fees.
- Check with your bank at home about international withdrawal fees before you leave.
4. Avoid Airport and Hotel Exchange Counters
We have absolutely nothing against hotels and airport forex kiosks. However, from our experience and stories from our past guests, exchange counters at airports and hotels often have the un-favourable, if not the worst rates. They charge higher commissions. Instead:
- Look for local banks or authorized forex bureaus in your destination.
- Consider using an international debit or travel card with low forex charges.
5. Consider Using Travel Cards or Multi-Currency Wallets
Many banks and financial institutions now offer prepaid travel cards that allow you to load multiple currencies.
- These cards protect against currency fluctuations.
- They reduce the risk of carrying cash.
- They can be used for both online and in-store purchases.
Examples of travel-friendly cards include:
- Visa Travel Money Cards
- Mastercard Prepaid Cards
- Wise (formerly TransferWise) Multi-Currency Account
6. Be Aware of Hidden Fees and Charges
Whichever option you choose to ‘carry’ your money abroad – cash, mobile wallets, debit/credit card – we advise that you familiarize yourself with any hidden fees that might surprise at the end of your trip when you face you come face to face with your expenditure statement. Some common hidden fees that travelers encounter when exchanging currency include:
- Conversion fees: Banks and forex bureaus may charge additional conversion fees.
- Dynamic Currency Conversion (DCC): Always choose to be charged in the local currency rather than Kenyan Shillings when using your card.
- Transaction fees: Some banks charge per transaction when withdrawing or paying internationally.
7. Use Online and Mobile Banking for Better Rates
Some banks offer foreign currency exchange services via mobile banking apps. This is where you can exchange currency at competitive rates before traveling.
- Check if your bank has online forex exchange options.
- Use fintech apps like Wise or Revolut to get real-time rates.
8. Negotiate When Exchanging Large Amounts
If you need to exchange a significant amount of money, ask if the forex bureau offers better rates for bulk transactions. More often that not, you will get a rate far much better than those exchanging regular amounts.
- Authorized forex traders may be willing to offer a better rate for large exchanges.
- Always compare rates at different locations before making a transaction.
9. Keep Your Money Exchange Receipts
Some countries may require proof of currency exchange when departing. Additionally:
- Keeping receipts helps track your spending.
- Some exchange bureaus allow you to sell back unused currency at a similar rate if you show a receipt.
10. Be Cautious of Street Money Changers
While you may come across money changers offering attractive rates on the street, avoid them due to:
- High chances of counterfeit currency.
- Lack of transparency in the exchange process.
- Potential security risks.
Traveling out of one’s country obviously comes with expenses. You need to have some money with you when traveling abroad.
Proper planning and awareness will certainly travelers get the best out of trips abroad. Currency exchange is one of the first things to do when planning your trip abroad. Take that very seriously. Get to learn and understand currency exchange rates and avoid unnecessary fees while abroad.
By understanding exchange rates, using trusted forex services, and leveraging digital banking solutions, you can maximize your travel budget and enjoy a hassle-free financial experience.
Always remember: a little preparation goes a long way in making international transactions while abroad smoother and more cost-effective. From us, it is Safe travels!
