Common mistakes made when moving cash overseas and how to avoid them
When dealing in foreign currency you need to have your wits about you, a small difference in exchange rate or a bit of laziness can end up costing you more than you think. If you're planning to send money overseas, get to know these common traps so you can avoid them.
Don't pay attention to exchange rates and fees
If you don't pay attention to exchange rates and fees, they're bound to quickly add up and cost you more. Blindingly thinking that your bank will give you a competitive rate, or trusting that a booth on the ground in your destination will give you a reasonable deal is going to cost you now and later. Rather, exchange rates should be the first thing you look at as they are the single most important element in currency conversion. Even a 1% change can make a massive difference when transferring larger amounts, far more so than other fees and charges so they should be the first thing you consider. For today's foreign exchange rates see here or for rates on international money transfers try our comparison tool.
Don't plan ahead
One of the best ways to guarantee you pay more than you should is to leave home without planning ahead. Currency conversion booths at tourist hotspots exist to take a slice of your tourist dollar, so they're an exchange you probably want to give a miss. Do your research before you buy so you know what a fair rate looks like before you leave home. That way if you plan to do your banking while overseas you'll know where to go for a good deal. Also, before you buy, check in with a free online currency converter from a trusted foreign exchange service to make sure you don't overpay.
Overusing credit cards
Although the convenience of swiping the same card anywhere in the world is a nice idea, not all cards are cut out for international travel. Many cards will charge a 3% transaction fee and hefty exchange rate on top of that, which will quickly eat into your spending money. Rather, choose a credit card that's built for travellers, or opt for a prepaid travel card that puts you more in control of your foreign expenses and also cuts down the chances of overspending as you can only spend the balance preloaded on the card.
Make too many small exchanges
Frugal travellers like to keep budgets tight and cash amounts carried in their wallets light to try to avoid temptation, but frequent ATM visits and foreign currency top ups will wind up costing you more because each exchange has associated fees. As a rule, the fewer exchanges, the lower the cost. When it comes to foreign exchange, you're better off overestimating the amount you need and making just one transaction, than having to top up several times on the road. Also when it comes to foreign exchange brokers it all comes down to scale ? the bigger the amount, the better the rate you're likely to get.
Not banking overseas during extended stays
Doing your banking by distance during an extended stay in a foreign country is a very expensive way to access your money. Rather, making the effort to set up your banking overseas, opening a local bank account with ATM card is most likely going to be a better option. Set up a no fee bank account abroad and sign up with a International Money Transfer broker to email you market-rate alerts to help you get the best rate on your currency exchange.