Currency Exchange Expense
Foreign exchange rates have always been a hidden expense for vacationers traveling to another country. That hidden expense can multiply quickly if a group of countries are on the agenda for a holiday. The Euro, which is the common currency of the European Union, was meant to reduce some of that expense by having one currency that could be used throughout Europe. Using the Euro eliminates the need to exchange cash the moment a traveler arrived in a new city. The Euro has helped some European travelers reduce the expense of multi-country travel within the European Union, but for most travelers exchanging money does have a negative impact on the budget. The exchange rate is in an almost constant state of flux, so exchanging money upon arrival and departure from a trip abroad can prove to be expensive.
Is the Currency Exchange Rate Stable?
Exchanging money at the wrong time can add expenses to the trip: You decide to make a trip to Vietnam and have a 1000 Euros in cash available for the trip and intent to exchange those Euros to Dong when you land at the airport in a couple of days. The foreign exchange market is changing constantly and could move 1400 hundred points in just two or three days and if it does it could cost you 140 Euros when you exchange your money. If your trip has been planned for several months the exchange difference could even be greater due to market movement, which means that the original 1000 Euros are now considerably less. The currency exchange market not only goes through minor changes; there could be sudden shocks in certain emerging countries currencies that devalue your original travel money. Countries like Hungary, Russia and Argentina could experience a major movement in their currency value and from that situation hundreds of Euros could be lost, if you exchange cash at the wrong time. In order to avoid these additional expenses a few simple measures can be initiated that reduce the impact of exchange rates on your travel budget.
How Can I Save Money when Exchanging Money?
One simple solution is to average your exchanges over a period of time before the trip. If you buy small amounts of the currency at different times before you actually leave, you can offset the role that fluctuations play in cash exchanges. Averaging your exchanges does have an advantage over a onetime exchange and is even less expensive than using a credit card in your destination country. Credit card companies use a rate of exchange that adds profit to the exchange, plus they add a surcharge on purchases made outside of your country. Exchanging currencies at a bank can also be expensive; they add a fee to the exchange and may use a rate that’s not accurate. Trying to exchange money in the middle of a trip usually costs much more than you expect, because of exchange rate variation and fees charged by exchange merchants.
Averaging reduces the frustration of feeling like you didn’t get the best rate. Exchanging small amounts at different times gives you more flexibility, which usually means a cost savings. Averaging is especially cost effective on extended trips where more money is needed to cover trip costs.
Other Travel Tips
Another important travel consideration is the amount of cash you take on a trip. Some countries have limits on the amount of cash they allow in the country. Carrying large amounts of cash could be illegal in some countries and if a custom search is done, the money could be confiscated. Personal security measures like keeping most of your cash in a secure area of your body where it can’t be seen and using hotel safes when you reach your final destination makes sense. When it comes to protecting cash, common sense and a personal security plan usually eliminates the threat of theft.
The experts at ForexTraders.com are passionate about discussing, analyzing and implementing currency exchange in the dynamic forex trading market. Visit our website if you need to learn forex basics, if you need assistance or more information concerning travel currency exchange rates or forex trading.
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