6 tips to help you save on your next exchange.
If you’re planning a vacation or need foreign currency to make a purchase, even a small difference in the rate can add up. Know what to expect so you can get more for your money.
1. Don’t just use your bank
Banks are notorious for overcharging consumers — this applies to ordering currency as well as everyday banking services. Banks charge a commission when you exchange currencies, and their foreign exchange rates are usually 3% or more above the market rate. Specialized currency exchange companies often offer a better deal.
Banks vs. currency exchange providers
| USD to EUR | Big bank | Currency exchange provider |
|---|---|---|
| Exchange rate | $1 = €0.918 | $1 = €0.942 |
| Transfer fee | $20.00 | $6.96 |
| Amount received when transferring $600 |
€530.80 | €558.24 |
2. Sometimes it’s worth paying a higher fee to get a better exchange rate
Don’t go for the first exchange company you see just because they don’t charge a fee. Often these companies offset this by offering a poor exchange rate. Before you agree to the terms, make sure you compare several providers to ensure you get the best exchange rate.
| USD to EUR | Exchange company 1 | Exchange company 2 |
|---|---|---|
| Exchange rate | $1 = €0.945 | $1 = €0.903 |
| Transfer fee | $20 | $3.99 |
| Amount received when transferring $600 |
€547 | €537.81 |
As you can see, although the company charges a lower transfer fee, its lower exchange rate makes the first company a better deal.
Back to top3. Don’t be fooled by the online calculator
Many of the online calculators show the mid-market rate, and not the actual rate you’ll get when you buy currency from that company.
You’ll usually see an asterisk next to the company’s online currency calculator if an indicative rate is used. If that’s the case, consider calling or chatting to a customer service agent online to find out exactly how much you’ll get.
Back to top4. Plan ahead
Figure out where you’re going to get currency before you need it.
- Spot exchanges. If you’re planning to buy currency on the spot, call the physical location you’re going to ahead of time to make sure they have enough in stock to cover your transaction.
- Online transfers. If you’re using a transfer company to send money to yourself for cash pickup in the country you’re visiting, check with the provider to make sure it’ll arrive on time.
- Online exchanges. If you’re using a company like Travelex to have foreign currency delivered, order far enough in advance to get the money a couple of days before you need it, just in case something happens and it’s delayed.
Case study: Adrienne’s experience
Adrienne Fuller
Publisher
Adrienne Fuller, Finder’s money transfers publisher, traveled to Tijuana last summer for a weekend with her friends and describes her experience finding currency exchange:
“I wish I planned farther ahead. If I had taken the time to order from Travelex when the exchange rate was preferential, I could have had the pesos delivered to me, a better rate and lower fees. But instead, I was on the train on the way to the border and couldn’t find a Western Union or bank that would exchange on the spot. When I got off the train before going through the pedestrian customs gate to Tijuana, I stopped at the only exchange available and was stuck with their poor exchange rate and a hefty credit card fee. Sometimes, it’s also cheaper to exchange USD in the destination country, if the exchange rate is in the USD favor. So lesson learned: plan ahead!”
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Compare currency exchange services
5. Compare, compare and compare again
Don’t go for the first company you see. Make sure you compare deals side-by-side and make an informed decision when you accept a quote from a company and pay for a transfer or exchange.
6. Ask for a better deal
If you’re a corporate customer and/or you’re making a large or recurring exchange, you may want to see if any of the currency exchange companies can cut you a deal. Worst case scenario: they say no. Best case scenario: you save money.
How currency exchange works
Currency exchange companies allow you to sell the currency you have and buy a different currency. For example, you could sell US dollars for euros. The rate of how much your currency is worth in comparison to the currency you’re exchanging it for is known as the exchange rate.
Banks and exchange specialists usually buy currency at a slightly lower rate than they sell it in order to make a profit, but how big that margin is varies from between providers. If you’re only exchanging a little bit of money, a small difference in exchange rate might not be noticeable. But the more you’re exchanging, the more important that rate is.
How long does it take to get the money?
It depends on the provider you’re using and what currency you need. If you need a currency that the bank or currency provider doesn’t have, it can take several days for them to order it. But if you need a popular currency that they have in stock, it can be instantaneous.
It’s always a good idea to check how long it’ll take to get currency before you need it so you don’t end up in a bind.
Bottom line
If you’re planning on taking a vacation or making an overseas purchase, compare currency exchange companies to find the best deal. And if you have any questions about your currency exchange comparison, get in touch with us using the form at the bottom of this page, and a member of the finder team will be in touch.
