Summer is finally here, which means that vacation is about to start. What are most people doing during their vacation? Exactly – they are traveling! So today, we will explore the topic of how to save money when you are traveling abroad.
Rule #1 – know your bank fees. Usually, Banks charge extra for cross-border transactions (cross-border transaction means that transaction currency is different from the currency of your account, for example – you have a USD account and traveling to Europe, where all transactions will be in EURO, so all of them will be cross-border transactions). Knowing how much your Bank charges for that before traveling will help you avoid surprises in your bank statement once you get back.
Rule #2. Don’t use the Dynamic currency conversion option, which is now widely available across the globe (especially in duty-free shops). What is that – it is an option when the duty-free store suggests you to pay in your account currency instead of a local one. For example – you are in Istanbul airport waiting for your next flight and cruising around duty-free stores. You finally found a fragrance that you wanted to buy, it cost 5000 TYR, and your account is in USD. The cashier asked you – do you want to pay in TRY, or do you prefer to pay in USD? Here it is! This is DCC – Dynamic Currency Conversion service. If you pay in your account currency, USD – your Bank will convert USD to TRY. Or, if you choose to pay in USD – currency conversion will be done by the Bank-acquirer of this store (and the store will also receive part of this FX). In most cases (99%), foreign exchange will be better at your Bank issuer rather than Bank-acquirer.
So always pay in local currency – this will help you to save money.
Rule #3. Prepare for your trip in advance. That means opening a multi-currency account in advance. Multi-currency account will help you to manage your balance and will give you the option to pay in different currencies without conversion. Actually, the conversion will happen anyways, but in advance and by yourself, using the better exchange rate with 100% transparency. Multi-currency account (or wallet) will allow you to top it up with one currency of your choice and then convert and hold many different currencies under the same account as per your needs. For example – you will top up in USD, and then convert your USD into EURO and GBP, so currency for all of your EURO and GBP transactions will not be converted a second time – it will be settled like-to-like (EURO to EURO and GBP to GBP, without any additional fees).
We wish you a great summertime with a pleasant payment experience. Enjoy your vacation and stay smart with Finsmarta!