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Great Tips for Buying Forex While Travelling

Mikhil Rialch

Last updated: Apr 3, 2017

So, the holiday bag is packed, the hotel rooms are booked and the pre-arranged tours promise to be the stuff of legend. The cash you’re carrying hasn’t been converted but then why bother, you’ll sort that out at the airport itself, right?

Wrong.

By choosing to figure out your forex issues at the last moment, you just dropped quite a chunk of that precious travel budget on excessive currency conversion rates. To make sure that doesn’t happen, we’ve got some great tips for buying forex while travelling.

Fun fact: Each year, about Rs. 205 crore are wasted buying forex at the last minute. So yeah, you need to be aware.

Places You Can Buy From

Among the legal channels, you can buy from money lenders, banks, travel agents and finally, airports. All of them come with their own pros and cons, which we shall discuss in a moment. But you should know that money lenders and currency conversion outlets are among the cheapest in terms of conversion rates/lending fees and the airports are easily the most expensive. For instance, money lenders usually have a margin of Rs. 0.20 per USD whereas airports will skive off Rs. 3 for the same amount.

There’s a reason why most people prefer legal, authorised channels over unauthorised dealers and that is called a receipt. Counterfeit bills is a real problem, and if you’re caught exchanging those in a foreign country – without a receipt – you could land in serious trouble. So ignore the temptation of those discounted lending fees and opt for authorized dealers who can provide you with an official receipt.

Credit and Debit Cards

While your bank will tell you that their credit and debit cards work smoothly abroad, don’t take them at their word. It’s common knowledge that most banks levy an exchange fees of up to 3 per cent each time you use a credit card abroad.

Debit cards don’t fare much better in terms of exchange rates: each bank will levy a fee of about Rs. 60 every time you use it for a purchase, and about Rs. 200 when you’re withdrawing cash from an overseas ATM.

foreign-exchange-tips

Prepaid Cards

Prepaid and travellers’ cards are usually a pretty safe bet for when you’re travelling abroad. Reputed travel portals offer them with a discounted application fees, and you get plenty of legroom to load them with as much cash as you please and simply use them like any other debit/credit card. If you lose it, you can simply report it stolen and get it blocked – again – like a regular credit card.

Added to that are benefits that the travel portal offers, such as discounts on airfares, hotels and restaurant bills. The more you use it on flights, the more air miles you accumulate. If you prove to be a regular customer, the portal usually has some pretty cool rewards on offer, such as a complimentary stay at a plush hotel resort. Point being, pay attention when your preferred bank or travel portal offers a new prepaid card – especially if you’re a frequent flier.

Travellers Cheques

While travellers’ cheques are a preferred way of storing cash for some, their pitfalls are now apparent. Even though they are easy to carry and store, they do not always work. Some places do not accept travellers cheques and want local currencies, and the exchange rates on them aren’t, shall we say, the most competitive in the dynamic travel market nowadays. Still, when in doubt, opt for a traveller’s cheque.

It’s easy to get muddled in the sometimes calculative world of planning your forex options. But look at it this way: if you were to buy $2000 (a relatively modest amount, if you’re travelling for a while) from the airport today, you’d stand to lose about Rs. 9000 in the transaction. So be a smart traveller and make your forex arrangements well beforehand. 

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