When is the best time to exchange currency for a vacation?
A vacation in another country is always worth the effort. Finding the right hotel and great restaurants is always exciting. Vacations take planning, patience and money as well as research and some good travel advice. Money usually tops the list when it comes to choosing where to go and what to see and do. A good travel budget is the foundation for a successful holiday. A good travel budget is based on getting the maximum return on the money you convert to the local currency. Waiting until the last minute to exchange your money or waiting till arrival at your destination can not only break your budget, it could ruin your vacation.
The currency exchange is constantly fluctuating. An 1100 point swing in a currency pair can cost you an extra $110 for every $1000 you exchange if you're using U.S. Dollars. If you're traveling to a country like Russia or Brazil who have emerging currencies, you could be faced with a sudden surge in their value, which could be devastating. Waiting to exchange a currency at the last minute is like playing Russian roulette with a loaded gun. If you get some advice and use an averaging strategy you can protect yourself from surges and swings.
When you exchange small amounts of money during the planning process you know what each exchange costs and you can use those values in your budget. You eliminate the guess work and a great deal of stress by using an averaging strategy. Averaging is especially important on long trips where you need more money for expenses. When you average your exchanges you can build a travel budget that works throughout the trip, unless you find something you can't live without while you're shopping at the Gold and Diamond Park in beautiful Dubai.
Where should I exchange my money before my departure?
Everyone wants to get maximum value on every currency exchange, so a bank is usually the first choice. However, banks add a fee to every exchange and they may only post one or two exchange rates a day which means you may not get a real time rate. Credit card companies love to exchange your money. They use their own exchange rate which includes a profit and they add a surcharge on every travel purchase, so you don't know how much the vacation actually costs until you get the statement.
If you average your exchanges with a reliable exchange trader you're able to get a real time rate and you know exactly what each exchange costs so your budget is accurate. A professional trader will help you choose the right time to exchange money, so you get a better return even when the exchange rate is not always in your favor.
Other travel thoughts
Always carry cash in a money belt or hidden pocket that's secure and out of sight. Use hotel safes and other security measures when you arrive and just carry enough cash in a purse or a wallet to buy incidentals. Some countries have a limit on the amount of cash you can carry through customs. If officials find you're over the limit your money could be confiscated.
Understanding the forex and currency exchange market can help you make a sound decision when trading. ForexTraders.com are experts in this field and offer free information on strategies, brokers, technical and fundamental analysis, and even a free course to help you learn how to trade forex.
Date: September 2009