Every time you buy or sell a product that involves another country you will be subjected to the differences between the two countries' exchange rates. When you pack up and take that overseas trip you will be subjected the differences in exchange rates in whatever country you visit, and when visitors come to Australia from another country they too will be subjected the differences in the exchange rate that will exist between the country they came from and that of Australia. In fact money exchange rates effect the daily lives of all of us.
Know Your Money Exchange Rates
It is important to know the exchange rate of your country if you are a businessperson, especially how it affects your budget when you purchase stock from overseas and once again if you sell your product to other countries. As an individual it is important when it comes to planning your overseas holiday or business trip. This is why it is imperative for you to know how money exchange rates work.
Money exchange rates differ from day to day, sometimes from minute to minute, they are very volatile and are dependent on many variables. To arrive at an exchange rate you have to value your home currency against that of the country you are dealing with. This means you might receive more Euros for your dollar, if you are travelling through Europe, or if something has occurred in the economic management of one of the countries you may get fewer Euros for your dollar. It is something you are not in charge of, and can do nothing about, but accept the differences.
Beware of Hidden Fees
The only control you do have is over the fees you have to pay in order to have your home country's currency exchanged to that of the country you are visiting. This is made much easier if you change your local currency to that of American dollars (USD) before you leave, as most money exchange rates you will find at the various airports, and exchange rate kiosks, will be in American dollars.
Whilst looking for a reputable money exchange dealer, don't allow yourself to be fooled by the eye catching advertising signs telling you they won't be charging you a fee for the service they provide. They will be, there will be no doubt about that. Without charging you a fee they wouldn't be able to remain in business. What they will actually be doing is hiding their fees in the money exchange rate they are offering. If you want to know how large a fee they will actually be charging, you can take a seat in the lobby before getting down to business, open up your laptop, and check with Google. Google is updating the money exchange rates continually. When you check with Google you will find the rate they give you will be different to that being advertised at the exchange counter. The difference will represent the fee the dealer is charging for making the transaction.
Use Your Credit Card
You will usually get the best deal on money exchange rates when you make an overseas transaction with your credit card. By using your credit card you will find you can save anything from two to seven percent when compared to exchanging cash or travellers cheques. In fact, whenever you want to make a reasonably large transaction always do it with your credit card for this reason. Save your cash for small things like cups of coffee or snacks at little cafes that have no EFTPOS device. Always use your credit card for paying for things such as car rentals, airline tickets and hotel bills. You will no doubt have to pay a small fee for making transactions on your credit card in a foreign currency but it will be cheaper than withdrawing more cash at a money exchange rate kiosk.
You may also find it more economical to withdraw money at an ATM, if they are readily available in the country you are visiting. You will find this a rather easy way to withdraw enough cash each day to keep you going so you can avoid having to carry too much cash on your person. Once again there will most likely be charges involved with each transaction but it will be something you will have to accept as part of the cost of travel.
When you need to cash your travellers cheques you will find you will usually get the best money exchange rates at post offices or banks. If they are American Express travellers cheques your best money exchange rates will be at an American Express office if one is available. Some hotels will give you a good deal as part of their service but it will pay you to avoid the money exchange kiosks you find at airports, tourist areas and the big railway stations.