The Pitfalls of Currency Exchange that Tourists should Avoid

The foreign exchange market is for many, a confusing one. Wherever Tourists go, they find themselves being offered the very best rates, 0% commission and more often than not, people lose out as they are not educated on the topic. This short guide has been written to make sure you do not suffer the same fate.

The problem with the tourist currency market is that it is quite unregulated and companies can (within reason) say whatever they want to, to win business over their competitors. If you need to exchange currency at some point in the near future, follow the following five steps to make sure you are getting the best foreign exchange rates:

1. 0% Commission doesn’t mean you’re getting the currency for free. Too many people fall into the trap of thinking an advertised 0% commission means they are not paying for a foreign exchange service. The phrase “commission free” is a very powerful one which is why most bureaus use it but you will often find that companies advertising such, are as expensive, if not more so than the competition. Companies that do not charge commissions will tend to charge a very wide spread which is the difference between their buy and sell prices and is essentially the same thing as a commission. The only thing you need to do when comparing companies is look at the actual rate they are giving you.

2. Don’t get suckered by your bank. High street banks are one of the most expensive places you can go to exchange currency. They prey upon their customers and are able to get away with the rates they charge because so many people trust them. If you can, try to avoid using a bank as there are much cheaper options out there.

3. Plan your currency needs in advance. Rather than leaving it until the last minute, plan how much you are going to take and weigh up the various options you are faced with. By giving yourself time, you will be in a position to research rates and choose the best method for you.

4. Consider using a currency card. Currency cards are a relatively new innovation to the world of foreign exchange although they are becoming more and more popular all the time. You simply preload your card with currency and can use it in restaurants and shops, the same way you would use a credit or debit card. The great thing about them is that the rate you will receive is far superior to what bureaus offer and they are much more secure than carrying cash.

5. Compare Rates. If trouncing around various bank and bureaus isn’t for you then you might want to think about using a rate comparison website. There are many out there that will check the latest rates and tell you which company will give you the most foreign currency for your money.

This guide was written by Marcus Holland, Editor of the currency rate comparison site ExchangeCurrency.com.