Foreign currency exchange is an important part of any business trip, but without the know-how it can cost your business hundreds of dollars in hidden fees and inadequate exchange rates – if you are making significant purchases overseas the expense can be even higher.
Like any financial process in your business, foreign currency exchange requires good planning and thorough research to avoid rip-offs. Business travellers who want to take a smarter approach to currency exchange should keep the following top tips in mind:
1. Exchange before you go
Exchanging money at airports or other transport hubs can be exorbitantly expensive. Avoid this by planning ahead and getting your currency before you leave home.
2. Compare exchange rates between providers
Look for a service that provides competitive exchange rates as close as possible to the wholesale market. Some banks boost their margins by not passing on the good rates that they receive.
3. Beware the dark side of convenience
Using your credit or debit card overseas can incur hefty charges, and fee structures are often opaque. Shop around for a credit card with low, transparent fees, minimise your ATM use when travelling, and explore other avenues such as traveller’s cheques and currency cards.
4. Go online for a better deal
The internet makes it easy to see what a good rate should look like. Secure online foreign exchange providers offer a good alternative to the banks in terms of fees, exchange rates and personalised service, and can facilitate international money transfers.
5. Work with quantity
Changing larger amounts of money at each transaction can result in a better exchange rate and lower fees overall.
6. Watch out for dynamic currency conversion
Merchants overseas may offer you ‘dynamic currency conversion’, meaning they charge you in your own currency. While it seems convenient, dynamic currency conversion typically results in a poor exchange rate and should be avoided.
- Jim Vrondas is Head of Client Dealing at OzForex Foreign Exchange Services.