When conducting foreign currency transactions, fees should always be considered. Individuals traveling abroad should generally do the bulk of their currency conversion in the destination country, but they should not convert more money than necessary. They should avoid illegal currency trading, which can make them targets of law enforcement. Also, when individuals are planning to conduct foreign currency transactions, they should do so when their native currency is strong.
Someone engaging in foreign currency transactions that involve exchange should convert only the amount of money that she needs. One reason for this is that a person is commonly charged higher transaction fees for exchanging larger amounts of money. Another reason is that if a person obtains foreign currency that she does not need, she may need to convert it back to her native currency, which will require her to pay transaction fees on that money for a second time.
Before traveling abroad, individuals may want to be safe and obtain some foreign currency. In most cases, however, it is best to limit this amount. Obtaining foreign currency outside of the nation where it is accepted is usually more expensive than making the conversion upon arrival.
The fees for currency exchange should be weighed against those for electronic foreign currency transactions. If it is cheaper to swipe a credit card or debit card and have the money deducted from an account, then it would be best to do so. Consider, for example, that an individual is in a foreign country and wants to make a purchase that is equivalent to $20 US Dollars (USD). It may cost an additional $1 USD to make a cash currency conversion, but the individual's bank may charge a flat rate of $0.50 USD per electronic transaction, making it cheaper to use a debit card. Paying attention to fees can result in substantial savings over the course of a trip.
Travelers to some countries may find that individuals offer to exchange foreign currency on the spot. Although this may be done on a wide scale and the rates may be motivating, it is important to realize that this practice is generally illegal. Travelers should avoid these types of transactions. It is not uncommon to find that law enforcers will allow natives to engage in these activities but will take action against foreigners because doing so tends to be much more lucrative.
It is important to note that exchange rates can constantly change. When the rates are not favorable, it is best to limit or avoid foreign currency transactions. Individuals making online purchases, for example, should do so on days when their native currency is strong, which will allow them to purchase more goods or save more money. Those who are in foreign countries should avoid making large currency exchanges on days when their native currency is weak.
