One of the biggest mistakes that travelers make is not understanding the currency when they are traveling. They can easily find themselves being swindled or just not getting the best possible exchange rate. Understanding currency isn’t that hard if you know what to pay attention too.
What To Know
There are a lot of things that go into how a currency is valued. These include the interest rates and country’s inflation. Therefore, the value of the currency from each country can vary greatly.
Getting More For Your Money
The stronger your home currency is compared to a foreign country’s currency, the better the exchange rate will be for you. This means that you can spend less money overall. If you are looking to get a good exchange rate while traveling, choose a country where the dollar is stronger in comparison to that country’s currency.
Types Of Exchange Rates
When you are traveling you may hear the terms spot or nominal exchange rates. Spot exchange rates, or interbank rates as they are sometimes called, are what the banks will give you as far as rates go if you buy or sell a foreign currency. However, the money you actually get won’t be the full spot rate. What you will get is the nominal exchange rate. This is the money you receive after the merchant you have received the currency from takes their cut. It’s important to know what both of these numbers are so that you can determine whether or not you are getting a good deal. The exchange rate you are given can vary greatly with the money exchanger, dependent on where you are.
How Exchange Rates Are Expressed
In general if you are exchanging the dollar for foreign currency and the dollar is higher, then the dollar is stronger. For example, if you see 1 USD = .73 EUR, then the dollar is a lot stronger. You may also see it expressed as USD/EUR = .73.
Where To Get The Best Exchange Rates
Travelers are often surprised to find that they usually get the best exchange rates by using an ATM machine. Basically if you use one of your credit cards that has no transaction fees for international withdrawals, then you will probably get the best rate available. Just make sure that when you are doing the transaction that you choose the option to do it in your local currency so that you won’t have to pay an additional conversion fee as well.
Cancellation Insurance
No matter how much you plan for a trip, an unforeseen circumstance may arise that will cause you to have to cancel it. If you don’t have travel insurance that covers this you may be out of a lot of money as many tickets and travel reservations aren’t refundable. When looking for travel insurance, choose a policy that will cover as much of a canceled trip as is possible just in case you have to cancel your trip at the last minute.
We have a partnership with AIG Travelguard and you can get a free quote for travel insurance. Click below to get started
