Tips for travelers: How to save money on fees by buying Currency Online
Buying currency online is similar to buying anything else, although sometimes it can be difficult and confusing. In order to understand the deep world of currency exchange, below is a comprehensive buyer’s guide for foreign currency.
Basics to understand before buying your holiday currency online
A regular purchase of any item involves choosing an item you like and later making payments designated on a price tag. However, buying currency online works the same way, although the only difference is that the ‘price tag’ is often hidden via the combination of padded rate and additional fees. Therefore, it becomes somehow difficult to gauge the exact amount you are paying when purchasing Euros, Pounds or Rupees online. Besides this, the sellers tend to use some confusing terminologies to complicate issues for you.
Below are some terms you will want to get familiar with to have a better understanding of the market in order to track down better deals:
- SELL RATE: It is simply the rate that a seller uses to exchange your currency for a foreign currency. For instance, if you want to travel to the UK, it is the number of pounds you get from your Euro, Dollar or Rupee.
- BUY RATE: It is the rate that a seller will purchase foreign currency back in exchange for the local currency. It is the number of Euros, Rupees, or dollars you would get when you leave the UK with left pounds.
- SPREAD: Have you ever noticed that the buy, as well as the sell rates, are totally different for a similar currency? While the money may appear as a “no man’s land” this difference is known as the spread and is where the provider makes some money. You need to be always careful on this spread simply because if it appears small, then you might be charged some other fees to compensate. On the other hand, if it appears huge, the exchange provider might be padding the rates for the purpose of huge profits.
- FORWARD RATE: It is simply an exchange contract that should be completed in future, with a particular set rate today. In most cases, these forward rates are not used by individuals but rather businesses which want to completely minimize the risk of currency fluctuation.
- COMMISSION: It is an additional fee that the sellers might have after exchanging currency. It can be a flat fee or as a percentage- or the two combined.
Ensuring that you get good deals
The perfect way of having peace of mind during the purchase of another currency is to shop around. The majority of the vendors will consistently change the exchange rates sometimes even more than once in a single day.
Due to technological advancement, one can easily compare the exchange rates of different vendors via the calculator tools located on their websites. Ensure that you add all potential fees on the figure you get from the calculator since some vendors may omit them until it’s too late.
Loyalty is known to pay in many areas, although foreign exchange is not one of them. Don’t be afraid of using different online providers to get better rates. This go-to travel money guide from Lendingexpert.co.uk explains this in further detail with exchange rates and currency providers compared.
Common challenges and issues
If you want to travel to a foreign country on holiday, ensure that you plan all the currency needs in advance in order to know the exact amount you should have.
The reason behind this is that frequent and small exchanges can come at high fees and also poor exchange rates. Although it is a better option if you are desperate, try as much as possible not to constantly rely on it. In most cases, convenient money is expensive money. Look for online providers and compare their offers from where you can get good deals due to competition.
If the exchange rates appear to be good, then probably they are. Online providers who charge high fees tend to offer better exchange rates and vice versa. You should read every bit of information before purchasing any currency.
Also, ensure that you note the particular transfer times since some providers appear to charge reasonable fees and exchange rates but go for a week or some days to exchange funds.
Other providers like PayPal will transfer the funds instantly although with a little higher rate. It is also a wise idea to transact with well-known and reputable vendors to ensure that your money is safe from fraud issues.