Going through the twists and turns of the currency rates can often make you feel puzzled and astonished. Especially when you are selling or buying, you are on a chase to find the best exchange rates, settle with the complex fee structures, get a trustworthy currency solutions partner and a right time to initiate a transaction.
If you are someone like me, going through daily news updates isn’t always tempting! It’s easy to miss out on world-changing economic events that can shatter the currency market. Don’t worry, I have been there and I’ve got you covered, here’s my go-to check list of the 7 essential tips to ease your currency exchange journey. Ready to have a look?
Explore Current Exchange Rates
The Foreign Exchange Rate is a rate at which one currency is traded to the foreign currency in the exchange market. The forex rates are derived from different economic activities in the country, like unemployment, gross domestic product, imports, exports, inflation and interest rates.
Before you start transacting in the forex rates, here is how you can check and compare the foreign exchange rates by using the below-mentioned methods:
Online Currency Exchange Service Providers
Visit online portals like Currency Solutions, WorldRemit or Travelex to check and compare the real-time exchange rates, just like you surf through different shopping websites, but this time, for your currency!
Google Search
You can go to your favourite search engine and type in the currency pair you want to exchange, “USD to AUD exchange rate”. It’s a quick way to get the latest exchange rate at your fingertips.
News Portal
Top news websites and financial news portals keep the live foreign currency indicators for their viewers. You can keep checking it regularly for the latest rates.
Apart from this, you can also refer to local banks and talk to foreign currency exchange consultants for updates on current exchange rates.
Monitor Economic and Political News
In stabilising the forex rates, global and political events play a vital role. Let’s check out the impacts of different global events that can swing the forex market and how you can tackle it:
- Always look forward towards the authorised reports conveying the economic indicator’s performance. The Gross Domestic Product, employment data, current accounts, and inflation rates indicate the country’s health and highlight the potential impact on the currency value.
- You can also evaluate the effect of central bank policies and interest rates on currency rates. Do you remember the US federal reserve rate hikes that happened in 2015 to 2018? It appreciated USD against the major currencies making it stand steel.
- Different political and geopolitical events like elections, political instability, conflicts between countries, trade wars, or diplomatic issues can bring fluctuations in the currency value. Remember, a politically stable country with strong economic growth is preferred by foreign investors.
Just like me, if you are also clueless about the geopolitical drama, ensure that once in a while, you check it out to predict or analyse its impact on currency values. Staying aware of current events helps in making well-informed decisions with the liberty to tweak your transactions to be in alignment with ongoing geopolitical events and political trends.
Consider the Costs and Fees
When you start dealing with currency exchange transactions and platforms, you will be introduced to different types of fees. Here are the insights into the costs that can be imposed on your currency exchange transaction:
Conversion Fees
Conversion fees, markups or currency exchange fees are the charges levied by currency exchange service providers by adding charges to the currency or mid-market rates.
Transaction Fees
Depending on the type of transaction, currency exchange service providers invoice a fixed fee or percent of the transaction amount, known as transaction fees.
Service Fees
Paid the invoices for those “extra services”? The service fees are the same, additional charges for premium features.
These are the major types of fees charged by the businesses. You shall also look for the different types of ‘Occasional charges’ as stated below:
Handling and Delivery Fees
Currency exchange bureaus take additional charges from clients when they are required to handle or deliver the physical money to the client’s place.
Foreign Transaction Fees
Foreign Transaction Fees are usually charged by credit card companies when the transactions take place in foreign currency.
ATM Withdrawal Fees
ATM Withdrawal Fees are taken by banks and credit card companies. It is applicable on cash withdrawals made in foreign currency.
Always be clear and double-check all potential fees or hidden fees with your currency exchange partner to avoid any kind of last-moment splurge.
Choose the Right Time to Buy
Currency exchange rates are derived from many factors, and you should get familiar with them to easily execute the transactions at the right time and rate. Know that currency transactions are as crucial as choosing the right stock!
- Be aware of how currency rate fluctuations are impacted due to economic indicators like GDP, employment data, inflation & interest rates.
- Stay alert to geopolitical events and market sentiments as they impact the attitude of the investors and eventually fluctuate currency rates.
Apart from this you can also utilise the financial tools and resources to research the historical data and upcoming events to find out the best time to buy or sell currency. This will help you to take advantage of favourable rates by taking precise currency decisions, and optimising your financial outcome.
Understand the Security and Legitimacy of the Source
Selecting the right currency service partner is equally paramount as choosing competitive rates or lower costs.
- You can surf through the website to acknowledge the regulatory status and licence details of the service providers. Good currency exchange service providers are regulated by financial authorities such as the Financial Conduct Authority (FCA) in the UK or the Commodity Futures Trading Commission (CFTC) in the US.
- Also, take time to evaluate the security of platforms such as encryption, two-factor authentication, and use of authenticated payment methods are adhered strictly.
- You can also navigate through the customer reviews, ratings and testimonials to learn how customer support responds to security threats. It’s like using the app vault to secure your data on the phone.
Having insights into these aspects ensures that you are dealing with the genuine currency offered by authorised dealers, ensuring the transparency of transactions and reduced risk of financial scams.
Plan for Currency Conversion and Usage
As a currency exchanger, it’s crucial to customise your currency conversion plan to emphasise your currency needs. It includes choosing the right mix of currencies, avoiding frequent conversions, poor exchange rates, and being away from unauthorised currency exchange bureaus. It requires you to be familiar with the impact of economic, political, and geopolitical events as well as market sentiments for both base and forex currencies.
You should consider using different payment methods like mobile payment solutions, travel cards, cash, debit or credit cards to get better exchange rates and lower transaction charges. While spending the money, you shall also take into account the ATM withdrawal charges, foreign transaction fees and transaction costs enforced at the point of payment to optimise your currency solutions.
Consider Your Payment Methods Abroad
Selecting the right payment method can ensure easygoing transactions with minimum costs and better security. Here are different payment methods you can choose:
Cash
Carrying cash is a convenient choice as it’s universally accepted and has no transaction or conversion cost at the point of transactions. However, carrying a larger amount of cash exposes you to the risk of being scammed or burglarised.
Credit and Debit cards
A credit or debit card provides better cash security and rewards, such as cashback, travel points, or gift cards. If a card is lost, you can immediately block or freeze it and eventually replace it. However, the cards come with charges like foreign transaction fees or dynamic currency conversion (DCC).
Mobile payment applications
Mobile payment solutions like Apple Pay, Google Wallet, Paypal, and Samsung Pay come with highly secure encryptions and let you pay at a click. But, their acceptance isn’t universal, and also, with technical issues like low battery or network, you won’t be able to make payments.
Prepaid travel cards
The prepaid travel cards have a facility to preload your travel budget and can easily be replaced when stolen. However, travel cards are not as widely available as credit or debit cards and often have charges associated with fund movements.
By understanding the pros and cons of the various payment methods, you can select the right payment methods that are flexible and cost-effective and cater for your needs.
Conclusion
Being updated about the current exchange rate trends, understanding the different types of fees, and choosing the right time streamlines your currency transactions. Not just that, these measures assure the pathway to a well-informed and secured currency conversion by using the right planning strategies and tools.
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