Easily Calculate Exchange Rates for Your Next Trip

May 7th 2016

Image Courtesy of epSos. de via Flickr

Taking the family abroad this year for vacation or perhaps you have an upcoming business trip outside the country? It's hard enough keeping track of your finances in your home country, and now you have to worry about exchange rates every time you make a purchase abroad. Good thing there are a few simple and easy resources to help you!

Helpful Currency Conversion Calculators

If you're lucky enough to have reliable Internet access abroad and want to know the exact exchange rate (no estimating!), then Oanda has a super easy calculator on its website. For example, if you see a jacket in a store for 65 Euros and you want to know what it is in U.S. dollars, the Oanda calculator will tell you in seconds.
Want something even easier? Well, if you carry around a smartphone with you while you travel, then a phone app may be the way to go. XE Currency has a free, five-star-rated app that allows you to convert on-the-go. This XE Currency apphas been featured on BBC and CNN. One great feature of this app is that it will store the last recorded exchange rate, so you can still use it even when you don't have access to the Internet. Whatever device you own, XE Currency has developed an app for it! It can be downloaded for iPhone, iPad, Android, BlackBerry, Windows and Firefox.

How to Quickly Convert a Price in Your Head

Websites and phone apps are great, but what happens if you don't carry a smartphone everywhere? Or maybe it's a small purchase that needs a quick back-of-the-envelope estimate on the spot? It's simple to calculate in your head, but you first need to conceptualize how exchange rates work.

Let's use an example. If the exchange rate is 1 Euro equals $1.25, it would  mean that visitors to the U.S. from a Euro zone country will be experiencing  everything at 25 percent off, just like a store-wide sale. In contrast,  Americans heading off to Paris will be experiencing everything at a 25 percent price hike, just like when you shop at a club store where you're not a  member and have to pay extra. Sounds simple, right? You do these types of calculations in your head all the time when you shop at home, so it's easy to do them when you're ready to shop abroad.

Quick Tips for Exchanging Money Abroad

Just because you're able to calculate the exchange rate doesn't mean that you're actually going to be paying this amount for a good or service. Unfortunately, there are exchange rate fees that will increase the cost of any particular purchase. So how do you get the most bang for your buck?

Do Your Research

Often, if you're buying goods or services, your credit card will be your best bet for making purchases with the lowest amount of fees. This is not true for every case, so if you don't know what your credit card will charge you, call your bank before your trip. Some luxury credit cards won't charge you anything for foreign purchases. If you're an avid traveler and make large purchases, it makes sense to get a more premium credit card, even if it has an annual fee. For example, Chase customers can sign up for the Chase Sapphire Preferred Card. For the first year, the annual fee is waived, and there is no fee on foreign transactions. If you're with Bank of America, the BankAmericard Travel Rewards Credit Card is another option for a credit card with no fees on foreign transactions.

Getting Cash

In many cases, an ATM will give you the best exchange rate for withdrawing cash, even with the added ATM fees. If you travel frequently, you may want to open an account with an international bank. Most banks will not charge you an ATM fee if you use their ATMs.

As a general rule, since each exchange will come with a fee that can be as much as $5 or 3 percent of your transaction, it makes sense to reduce the amount of times you exchange money. This means that you should estimate the amount of cash you will need for your trip and exchange it for the full amount in one transaction if possible. It's much more economical to go to the ATM and withdraw $300 all at once instead of withdrawing $50 a day, every day. 

With a little bit of research and planning, you'll be ready for your next trip!

Sources:

http://www.oanda.com/currency/converter/

http://www.xe.com/apps/?WT.mc_id=XMA-TL-XROS-XIN-XX-currency_page_V01-130301#section1

https://creditcards.chase.com/sapphire/?CELL=6RRW&jp_cmp=cc/03BRSapphirePrefExact/sea/na/SapphirePref

https://consumer.bankofamerica.com/USCCapp/Ctl/entry?sc=VAB8UO&GV12=H|869|F523616594&GV10=H|874|1032211

http://www.nerdwallet.com/blog/banking/debit-card-foreign-transaction-international-atm-fees/

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