The 1-2-3 of Foreign Currency:
When & How To Exchange
Are you planning to go abroad? If so, it's very likely you'll be dealing in a currency other than the one you're
used to, and will have to exchange currencies. This brings up a whole heap of questions, especially if you are
new to traveling abroad. How do you read the foreign exchange rates? How do you make sure to get the best
exchange? These are just a few questions that need to be answered when dealing with foreign money, but this
fadvice will make it one less thing to worry about.
A few basic tips can help you save when it comes to dealing with foreign currency. Photo by Peter Lavelle
1. How to Read Foreign Exchange Rates
When visiting a currency exchange, money exchange, or bureau de change (as they are known in Europe), you'll
see a board that looks something like this:
USD/EUR: 0.74
USD/JPY: 98.75
USD/CAD: 1.02
USD/GBP: 0.6250
The board may look a little confusing at first but these businesses are specifically for exchanging one currency
for another and will answer questions.
Each of the 3-letter codes refers to a currency. “USD” stands for US dollar, while “EUR” is euro, "JPY" is
Japanese yen, and so on. Each line features two currencies, because these are the currencies that will be
exchanged. The number at the end of each line is the current exchange rate that you will receive. So, for the first
line, were you to exchange $1 US dollar, you'd get €0.74 euros in exchange.
2. How To Get the Best Rate
It goes without saying that everyone wants the most foreign currency possible. So how do you get it? The thing
is, foreign exchange rates aren't fixed. They change all the time, depending on what's happening in the global
economy. One day you might check the "USD/EUR" exchange rate, and see it's 0.70. Then a week later it's
0.75. So what's happened here? During the week, the US dollar has gained value against the euro so now you're
getting €0.75 euros for every dollar and earning yourself $2.50 for every $50 exchanged. Might not seem like
much but that pays for a snack or ATM fee plus, it adds up.
Bottom line: keep an eye on exchange rates especially if you will be living in a foreign country for an extended
amount of time. Even a small change can save a few bucks here and there.
3. How To Keep Up-To-Date with Rates
Since the foreign exchange rate is constantly changing, how can you keep up with it and exchange currencies at
the best time? One simple way is to use Google. Just enter the currencies into Google (for example,
"USD/EUR") and Google will return the latest exchange rate.
Make checking the exchange rate once a day, or once a week, part of your routine. Then, when you see that the
exchange rate has improved – go for it! You can also check the exchange rate on your smartphone, with apps
from XE.com.
4. How To Avoid Unnecessary Fees and Commission
Once you decide to exchange currencies, you'll want to do so as cheaply as possible, which of course, means
avoiding any unnecessary fees and commission. A bureau de change shouldn't charge any fees or commission
… at all. If the bureau de change tells you there's a fee, look elsewhere. It shouldn't be too difficult to find a
bureau de change that provides the service without extra charges.
5. Other Foreign Exchange Tips To Keep in Mind
A. Different bureau de change offices will offer different exchange rates, so compare!
B. The earlier you look at exchanging currencies, the better. This provides a bigger window for the exchange
rate to improve.
C. Don't exchange currencies at the airport! They're well aware you're doing so at the last minute or that it’s
your first stop after a long flight. They typically offer poor exchange rates.
D. Prefer not to carry cash? Consider a foreign currency card, which you load with funds before traveling. Fair
FX and Caxton FX offer both.
E. Don't use a normal domestic debit card or credit card abroad. Usually, they charge a host of fees such as the
dreaded foreign exchange fee but there are the few that don’t, so call your bank or company to be sure.
F. Notify your credit card company and bank of your travels or the unusual activity and location could result in
the cards being locked. This can be difficult to remedy from abroad and leave you with no money at all!
About the Author
Peter Lavelle Peter is a foreign exchange dealer at the currency broker Pure FX. He's lived in Madrid since the
start of 2012, so has a pretty good idea of the challenges involved in dealing with foreign currency. To find out
when the best exchange rate becomes available for you, sign up to Pure FX's newsletter.