4 Effective Ways To Get Best Rates On Foreign Exchange While Travelling
When it comes to planning and getting your foreign exchange for your trips, one of the biggest challenges a traveller faces is the correct exchange rates. When you are travelling abroad, every penny you spend counts, and you might also think that escaping the banks here and directly trying to get forex from the foreign exchange shops in the destination may seem to be a good idea, but not always, though. Here are few tips to help you understand what goes behind when you are looking for the best forex rates.
1. Understand the Brokerage Structure
Often, we do not focus or even understand the forex brokerage structures. Forex Brokerage is the percentage amount applicable on the currency of destination you are planning to travel. Essentially, this is a volume transaction, which means the percentages are applicable based on the volume of currency you are willing to exchange. This means if you are using more currency for your exchange, you should be charged lesser percentage on your currency. However, that does not happen.
Before you get into the purpose of exchanging your currency, you must consider a rough outline of the brokerage structure that applies to you on your currency exchange rates:-
INR----> BANK----> (BANK BROKERAGE + TAXES)----> RBI EXCHANGE RATE AS PER FEMA REGULATIONS ----> MARKET LOSSES ----> USD
This is a crude example of how many handshakes particularly take place while you choose to manually exchange the currency from the banks. The rates that are reflected to you might also not be matching exactly or nearly the current market rates.
2. Compare With The Real Time Markets
When deciding about currency exchange, the usual idea is to call up the bank where we have our bank accounts and inquire them the present rates. While you try to do that, it is also a good idea to cross-check information with certain good forex websites.
The xe.com provides the closest currency exchange rates for a real time analysis. You can also use information from MoneyControl or similar websites to get the nearest real-time currency exchange rates.
This will give you a fair idea before you start contacting the various banks to start asking them for the exchange rates and consciously evaluate the losses in your exchange.
The xe.com provides the closest currency exchange rates for a real time analysis. You can also use information from MoneyControl or similar websites to get the nearest real-time currency exchange rates.
This will give you a fair idea before you start contacting the various banks to start asking them for the exchange rates and consciously evaluate the losses in your exchange.
3. Induce Competition for Best Rates
It is usual for us to get overwhelmed with the apparently complex foreign exchange mechanism and eventually give in to whatever rates are available to us. But here is the catch. Let us understand this with a simple example:-
Suppose you are want to exchange Rs. 100,000/- from two different banks X and Y, which are giving you rates of $66.16 and $66.23 as the current exchange rates. You have checked from the market and realised that the rate of currency today is $66.75. Which is the bank you would choose to go for the exchange?
Actual Market Rate - $66.05
Currency to Exch
|
X
($66.16)
|
Y
($66.23)
|
Rs 100,000
|
$1511.49
|
$1509.89
|
If you were to get the currency at the Actual Market Rate of $66.05, you would have received (Rs. 100,000 / $66.05) = $1514.00 .
But with the bank giving different rates, you willreceive an amount lesser than this. It is obvious from the above example that the bank X is offering a better rate than Y as with a higher exchange rate implied to you, you are losing more money on your exchange.
the best way out is to induce competition among the providers. The bargaining strategy often works, especially when the currency volume is higher. Try to get the quotes from the banks, and then try to bargain with them, with the competition from the other bank rates. Eventually, the rates will crumble - Try it out.
4. Use a B2C E-Wallet Account
The E-Wallet services have improved the way one can exchange foreign currency in a big way. the best advantage is removal of multiple handshakes. Also, physically exchanging the currency also puts you in an obligation to re-exchange the currency once you return to your country, which means again recurring losses. Keeping an e-wallet account such as OK Pay, allows you to exchange more than 20 international currencies.
It also allows you to transfer payments electronically from one e-wallet account to another, free of cost and also lets you make electronic payments in the most used currencies once you have exchanged the currencies in your wallet account for your flights, hotel bookings, purchases and shopping.
The e-wallet also allows you to upload, add, withdraw and transfer currencies in more than 73 different ways which include bak wire transfers,online banking, money transfers, mobile money, or third party banking methods.
With immense flexibility, you can exchange currencies in as low as 2% rates. This allows you to have more control on your currency for your exchange.
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