Need to Change Money for Your Next Foreign Trip? Here Are Few Things to Keep in Mind

Booking flights, packing up your luggage, placing your dog at a care centre, or asking your neighbours to keep an eye on your property when you’re away are important things to do before you leave for your next foreign trip. But, are you sure you’re not forgetting something else that’s important as well?

Money Exchange, Although a Little Complicated, Has to Be Dealt With Sooner or Later

Ah yes! You still have to visit a money changer to exchange your dollars for foreign currency. But, irrespective of the number of times you have already visited a foreign-currency exchange centre, you always feel a slight trepidation, don’t you? That’s probably because many of us still don’t understand how the system works and why the exchange rates differ from the ones shown on the internet, among other things. There’s then the question of which money changer to go to. Singapore has a number of licensed money changers. Local banks could also exchange money for you.

Some of the other questions are:

  • Should you get your money changed in Singapore or should you do that in the country you’re visiting?
  • Who offers the best rates?
  • Are there hidden fees and charges that you need to be aware of?

To answer these questions and more, we have created a comprehensive guide for you so that the next time you plan a foreign holiday, you’ll hopefully enjoy peace of mind from the time you book your flight till the time you’re on it!

Trying to Determine Your Best Money Exchange Options? Here Are a Few Pointers:

  • Exchange rates offered by a money changer may differ from the rates available online. If you see that the buy or sell rates offered by your money changer are different from the ones available on MAS or other government sites, don’t panic right away! You’re probably not getting defrauded. It’s just that money changers usually add administrative fees, commission charges, and their profit margin. Plus, most of the money changers in Singapore or even abroad may be privately managed, which gives them the right to determine their own rates. This brings us to our next point.
  • Have you been offered the best rate? Although you shouldn’t be too worried about the difference in rates offered by a changer and the government, you should definitely take into consideration the variations in rates offered by different money exchange centres. It has usually been seen that centres that see a lot of foreign tourists such as airports and busy malls, offer poor exchange rates. That means, you may have to pay a lot more to buy foreign currency from the changer but get a lot less if you were to sell some foreign currency bills that you have on you. That is why you should do thorough research on the internet and if possible, shop around physically to ensure that you have the best deal.
  • Commission fees don’t always hurt! Before you dismiss a money changer simply because you see “We charge commission fees” on their signboard or their website, wait! Commission charges may not always tip the scales against you. In fact, on close scrutiny, you might find that the money changers that charge a commission fee may be offering better deals than the ones that don’t. Again, the advice will be the same. Shop around and scan through the fee breakup to see if you’re falling prey to hidden charges or not.
  • Should you be exchanging money in Singapore or abroad? The answer to this question will depend on the country of your visit. While exchanging money in Singapore may be more sensible when you’re visiting certain countries where the exchange rate is in favour of Singapore and the changers may be offering more to get hold of Singapore dollars, it is just the opposite for other countries. In any case, going online and looking around won’t hurt. Also, some money changers in foreign countries may be offering better rates for higher denominations than smaller ones. Find out more about such offers and also have a clear understanding of the terms and conditions of such offers, if any.
  • Crumpled notes and torn bills may land you in a “soup”. You may come across money changers who refuse to accept bills that are taped, torn, or crumpled. Or, they might just offer a lower rate for such currency notes. If you’re physically carrying cash and exchanging it, try to keep them in good condition - away from dust and moisture. This problem may become more pronounced if you decide to exchange money abroad because the trust factor can be much less.
  • Should you be really concerned with the brand or the location? While brand popularity or location of physical outlets are by no means perfect indicators of the soundness of a deal, you’ll have to concede that popular brands usually carry a lot of goodwill for a reason. Most often, you’ll find that these brands have been offering good deals to their customers on a consistent basis. They usually never promote unfair practices and strictly comply with government regulations.

    While it is true that money changers in certain prime locations offer poor exchange rates, the same may be true for tacky shops in dingy corners of the place you’re visiting, even though you may not always realise it. They may make all sorts of promises on their websites and pamphlets, but at the end of the day, many of these may be nothing more than marketing gimmicks. Hence, be very careful about the offers you choose. Go through the fine print, and if you don’t understand the fee structure or breakup, don’t hesitate to ask.

  • Check rates online before approaching a money changer. While we have already explained that the “purported discrepancy” between the rates offered by a money changer and the rate fixed by the regulatory authorities, is probably due to certain fees and markups that get added, it still makes sense to be apprised of the latest exchange rate because ultimately it forms the basis of the rates offered by changers.

    These rates usually change multiple times throughout the day. Tracking these changes on a real-time basis is important. So, if you see that the deviation between the current exchange rate and the one offered by the money changer is too big, you can always question them.

  • Should you use a credit card, your debit card, or cash? There are different theories. We won’t recommend one over another. The decision is ultimately yours. However, keep the following things in mind:
    • Credit cards, when used abroad, can attract higher interest rates, foreign exchange fees, and a number of administrative charges. Make sure that you have a fairly good understanding of the fee structure before using it in an overseas location. However, we would advise you against using cash advances when you’re in another country, simply because of the high interest rates attached to this facility.
    • Debit/ATM cards may attract lower exchange rates than cash. However, this will again depend on your bank, partner networks such as Visa/Mastercard/American Express, and maybe even the regulations of the country you’re visiting.
    • Cash may come in handy, especially in countries, where cash is still predominantly the primary mode of transaction. Also, cash might reduce the chances of unauthorised transactions and fraud. However, this doesn’t make light of the fact that carrying cash is quite cumbersome. Also, you may not always enjoy a favourable exchange rate when you use cash while on a foreign visit.

It’s Ultimately a Business. Don’t Have Unrealistic Expectations From Money Changers!

While it is true that a raw deal from your money changer isn’t acceptable, don’t be too dissatisfied if you have to pay a little extra for exchanging money. Thanks to them, you can have foreign currency bills in your hand in a fast and efficient manner.

In fact, if you find that the deal is too “sweet”, it’s better to turn your back than get duped. When you’re exchanging money, you’re not just buying foreign currency but also the promise of spending “quality time” with your family or friends at an exotic location. After all, for everything that money has managed to buy from the time it was first invented, it still can’t buy happiness!

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