The world of currency exchange can be a confusing one. Many people don’t even know a country’s currency until they visit. So getting a good deal when they buy foreign currency can be difficult. If you don’t really know what you’re doing, you can easily end up with a bad deal. You might be buying holiday money or something from a seller in another country, or running a business with customers and suppliers overseas. Either way, you want to guarantee that you aren’t losing money. When you buy currency as an individual, you could be be buying holiday cash or you could be investing in something as large as a property. Make sure you know what you’re doing by educating yourself about currency exchange and the best way to get a good deal.
Know the Language
Like most things in life, currency exchange has its own jargon. Start with the basics and learn the language, so you’re not confused right from the beginning. Some example include:
- Sell rate – the amount you get when you exchange pounds
- Buy rate – the amount you get when you exchange foreign currency back into pounds
- Interbank/bank to bank rate – the wholesale rate banks use to exchange between themselves
- FX – foreign exchange
Do Your Research
Make sure you do at least a bit of research around the currency you want to trade in. Many currencies will be quite straight forward. But some will have strange rules surrounding exchange. For example, the Moroccan dirham cannot be exchanged internationally. You must exchange it inside Morocco. Cuba meanwhile has two different currencies, the official Cuban Peso and the Cuban Convertible Peso.
When you’re exchanging money, don’t go straight to your bank or nearest bureau de change. You should compare exchange rates at several different places. Not everyone will offer the same rate. You can directly call different providers, to make sure you have the most up-to-date information. There are also several different comparison sites that will show you rates from a number of providers.
Bide Your Time
Exchange rates fluctuate from day to day, so if you can wait until the rate for your chosen currency begins climbing. Watch the bank to bank rates so you can learn about how high a good rate is and how low a bad one is.
Use a Specialised Service
If you run a business or regularly exchange large amount of money, using a professional service such as Baydonhill will probably be beneficial for you. Exchanging foreign currency can get quite complicated when you’re dealing with large amounts, and you also have to worry about things like taxes. Using an expert will mean you don’t make a mistake, either legally or in terms of loss of money.
The key thing to remember when you’re exchanging currency is not to rush into it. Be prepared and start thinking about your exchange long in advance, rather than leaving it until the last minute.