Important Tips for Currency Exchange When Travelling Abroad

Understanding exchange rates is essential before exchanging your currency for a foreign currency. In simple terms, the exchange rate is the value of one currency against the value of another. It can make or break your travel plan because the exchange rate decides how much foreign currency you will receive against your home currency. However, the currency exchange rate is not fixed and varies depending on the currency demand and supply.

Your home currency may not be acceptable in countries outside India. You will require currency exchange at some point in your international trip. Knowing the currency tips will save you from paying more than required. It saves you from exchanging currency for a poor exchange value and paying high currency exchange fees.

Due to the various fintech advancements, you can now safely carry cash when visiting any part of the world. Here are some tips before you opt for a currency exchange service:

• Do your research: Ensure you know the current exchange rate for the currency as it fluctuates. Avoid exchanging your currency outside banks. Confirm the conversion rate and services offered with your bank before exchanging currency. If you maintain credit cards, know that some credit cards may be more expensive than others to use on foreign trips.

Moreover, credit card providers charge international transaction fees once you exceed your daily credit card limit. Therefore, in-depth research at your bank and credit card provider can help you save more on currency exchange. Another tip is to use your no-fee credit cards to make high-value purchases, like hotel expenses, car rentals, shopping for expensive items, etc.

• Plan in advance: Just like you make your flight and hotel reservations much in advance for your trip abroad, get your currency exchanged a few weeks before your travel date. It gives you enough time to observe the currency rate fluctuations. This way, you have enough room to exchange your currency on a day when you get a more profitable deal on your currency exchange. On the other hand, if you do the currency exchange after reaching your destination, you may have to pay a higher exchange rate and suffer a loss.

If you are wondering ‘how to exchange currency in India?’, know that the process is straightforward. In India, you can exchange currency at banks, private money changers, airports, etc.

• Go for the local currency: Some countries accept dual currencies, especially the US Dollar. However, it is advisable to choose the local currency as local businessmen and shopkeepers charge exorbitant currency exchange fees. These shopkeepers may confuse you and claim that opting for another currency makes tracking expenses more manageable. However, use the local currency and avoid any dynamic international currency exchange on your trip.

• Compare exchange rates: Currency exchange rates vary for different merchants. The exchange rate is usually higher in and around popular tourist destinations and airports than in less popular tourist destinations. Some traders allow tourists to compare exchange rates by authorised money changers. Moreover, you can order currency online and get it delivered.

• Avoid exchanging currency at airports: Exchanging currency at airports is not a good idea. Most international airports charge an exchange commission of 10 to 15%, and there is no scope for bargaining. The situation does not change even if you exchange your currency at the Indian airports. The Airport exchange rate in India is relatively higher than other modes of currency exchange in the country because, like all other international airports, Indian airports also mark up the currency exchange rate to make a profit.

• The 30-70 rule: As a general practice, keep 30% of your overall travel currency as cash and the other 70% as e-money on your cards. Keep the cash reserve to pay only where it is necessary to use cash. For all other transactions, try to use your cards.

• Make a provision for the exchange fees: Exchange providers charge an exchange fee on currency exchange. This fee may be in the form of a transaction, conversion, or service fee. A lot of times, travellers forget to make provision for the currency exchange fees and watch their travel budgets go haywire on their trip. Therefore choose an exchange provider with a transparent and upgraded exchange process and a low exchange fee.

• Exchanging too much currency: Sometimes travellers are unable to estimate the amount of foreign currency they will need on their trip abroad. As a result, they end up exchanging much more currency than required. Carrying too much cash can be risky. It can expose you to the risk of theft and currency misplacement. Moreover, exchanging back unused foreign currency for your home currency can result in a significant loss due to a high exchange rate and fee. Therefore, try to budget your trip and carry a reasonable amount of foreign currency with you.

Planning currency exchange for your trip abroad is as important as getting a visa and booking your air tickets. Keep a reasonable mix of cash and e-money on your foreign trip. Additionally, choose your exchange provider carefully to avoid paying high exchange fees. Among all the necessary documents for your international trips, travel insurance is a must-have. One more point: when choosing travel insurance, go with a popular insurer like Tata AIG. Because with us, the travel insurance claim becomes super easy in case you need to meet unexpected expenses.