Today’s world is more interconnected than ever before. In 2019 global tourism reached an all-time high, as more than 1.45 billion people traveled internationally during the year, and, according to The Guardian, international travel is increasing 6% annually. At the same time, the World Wide Web is making communication and commerce a global phenomenon, bringing once disparate communities closer together.
Of course, while the world is indelibly interconnected, countries and regions still use unique, national currency to facilitate commerce. Collectively, there are 180 currencies around the world, each with its own value, usability, and exchange rate. While some assets, like stocks and bonds, fluctuate in value during scheduled trading hours, foreign currency rates are always changing. What’s more, these exchange rates are impacted by numerous factors, including a country’s economic metrics and the impact of big investors on the cost of various currencies.
Simply put, monitoring foreign currency exchange rates is an always-on job, and today’s consumers need the best information to effectively capitalize on the opportunities afforded by our global markets.
In that way, world travelers, people making international payments, or those looking to derive a profit from differences in global currencies, getting the best FX exchange rate is a top priority.
Whatever your motivation, here’s how to find the best fx rate.
#1 Use a Currency Exchange Service
Online platforms provide users with real-time rates and easy-to-use functionality that equips foreign currency exchanges. In our digital first-world, they are a natural first stop for anyone looking for the best FX rate. To be sure, these services have varying profit models that impact the ways they charge their customers, but often these services can provide better rates and more convenient usability than other options.
Moreover, because these services are as close as the nearest smartphone, they enable consumers to shop around, ensuring that they receive a competitive FX rate. Of course, some platforms come with other fees and charges, so users will want to fully assess the exchange process before buying or selling foreign currency through an online service.
#2 Avoid Airports
For many travelers, the first and most obvious place to exchange currency is the airport. Like most things at an airport, users are paying a steep premium for the physical convenience of goods and services. Exchange rates in the airport are especially egregious. The Independent reports that airport rates can be as low as 24% below market value, which means that travelers exchanging €400 would lose almost €100 in the process.
As Ian Stafford-Taylor, CEO of FairFX, a travel money provider, told the publication, “Exchange rates will always fluctuate and it’s no secret the pound has been on a bit of a rollercoaster in recent months, but it seems regardless of whether the market rate is good or bad, airport currency exchange desks continue to offer significantly lower rates to holidaymakers.”
With a little planning, travelers can avoid paying exorbitant exchange rates during their travels.
#3 Eschew Currency Exchange Stores
Especially in areas populated by tourists, currency exchange bazaars are often incredibly popular. While these shops often offer better rates than airport exchanges, currency exchange stores or kiosks rely on many of the same principles as airport exchanges, as convenience and certainty often mask the reality that consumers aren’t receiving a great deal.
Shoppers, looking to make imminent purchases, are often stuck using exchange shops or kiosks, which is unlikely to provide the most profitable path forward.
#4 Be Careful About Big Banks
Many travelers and those making foreign payments rely on their debit or credit cards to facilitate these services. However, these banking exchanges can include:
- Foreign transaction fees.
- Out-of-network ATM fees.
- Daily transaction or withdrawal limits.
- Currency conversion rates.
Similarly, travelers that fail to notify their financial institutions of their movement may find their cards decline as companies try to identify and prevent fraud by stopping potentially malicious transactions.
Although big banks are a far better option than airport kiosks or on-demand exchange shops, consumers will want to consider all expenses before making a decision.
#5 Make a Plan
In most cases, investors, travelers, and shoppers can avoid high fees by making a plan. For instance, investors can use things like forward contracts and market orders to guard against unexpected currency shifts. Meanwhile, travelers and shoppers can avoid last resort options by harnessing digital platforms or identifying competitive exchange locations.
In addition, working with a currency specialist can ensure that you don’t get bamboozled by platforms and services looking to capitalize on the international exchange of money. However, everyone is certainly capable of achieving a competitive rate with little or no professional input.
From investors looking to capitalize on foreign currency to world travelers, achieving the best FX rate can be the difference between financial opportunity and dwindling resources. There is no shortage of options for identifying the best FX rate.
Today, there is a competitive market of establishment services and burgeoning startups looking to equip the billions of globally-minded consumers with the currency that they need to flourish in our interconnected world. By taking steps to avoid obvious pitfalls and intentionally hurting new opportunities, everyone can attain the best possible FX exchange rate to suit their purpose.
Businesses and individuals continue to enjoy the benefits of our global economy, and exchange rates are a natural hurdle to this infrastructure. By following the right steps, anyone can achieve the best prices for participating in the world economy.