By Natasha Epenu (World Trotters)
A colleague travelled to Tanzania from Uganda recently. Upon arrival at Dare salaam, my colleague walked to a forex kiosk, pulled out Uganda Shillings in an attempt to buy Tanzanian shillings. The forex attendant stared at him and asked ”What is this?” we don’t accept this currency here. Fortunately, my colleague carried US Dollars as well, which they later used for the transaction.
One of the most important tasks I’ve learnt to carry out prior to my international travels is to research and correctly convert currencies. This saves you time, money, embarrassments and inconveniences.
Exchange rates can make or break your international travel plans, and understanding them is vital to saving money while you Trot the World.
In simple terms, an exchange rate is the value of one currency (for example US Dollars) in comparison to another currency (Uganda Shillings). It determines how much money you will receive when you exchange your home currency for the currency of the country you are visiting.
Understand what the exchange rate is – The exchange rate is the ratio between currencies from two different countries; for example, your home currency and the local currency of the place you are traveling to. It’s important to keep an eye on how the exchange rate is moving so that you can exchange your money at the right time to get the best possible rate.
Factor in currency conversion fees – Whenever you exchange one currency for another, there is a cost involved. This is known as the currency conversion fee and can vary considerably from one foreign exchange specialist to another. Take time to check how much the fee is before you exchange your currency because this can have a huge impact on the amount you receive.
Buy currency before you travel (I do this all the time) – When you are traveling to another country, you can exchange some of your money before you leave home. Doing so gives you time to shop around for the best rate. Plus, when you arrive, you won’t have to immediately find a bank or currency exchange. Do some research ahead of time to see if US dollars are widely accepted at places you plan to go to. This could minimize your need to exchange currency. Sometimes exchange rates are more favorable outside of the country whose currency you’re looking for. Even if they’re not, it’s best to get some cash before arrival just in case your debit card doesn’t work or gets stolen
Bring some US dollars with you – Even if you think you won’t need much cash, it may be worth having some US dollars in cash with you just in case you run into trouble with your bank account, debit card or credit cards when you arrive at your destination.
Access local currency when you arrive – If you do need to get local currency when traveling or on arrival, it’s best not to use airport exchange kiosks as these tend to have higher currency conversion fees and less favorable exchange rates. You can use your debit card at an ATM to withdraw cash but be careful that your bank doesn’t charge excessive fees. Check the fees charged by your debit card provider and consider whether it’s worth getting one that doesn’t charge any currency conversion fee.
Use credit cards for bigger purchases – You can save even more by using your no-fee credit card when paying for hotels, car rentals and other large purchases. Just remember in many parts of the world, cash is still king and vendors won’t accept credit cards for smaller transactions.
If you plan to use your credit card for purchases, be sure to find out what fees your carrier charges and then compare with alternate methods of currency conversion. This includes cash advance fees—credit card companies will often allow you to get a currency cash advance, but fees can be high.
Don’t Put All of Your Money in One Place – Consider your options for carrying your money if you travel abroad. Take some local currency with you to pay for travel, food, and taxis. or load money onto a travel card for large purchases like hotels and reservations. Also, don’t forget to bring your debit or credit card as a backup or in case of emergencies. Also, bring US dollars with you on your trip in case your credit card or ATM card malfunctions.
Lastly, Enjoy Your Travels! – If you do a little homework before leaving for your trip by knowing about exchange rates and tips on managing money overseas, you’re likely to save money.
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