Is it cheaper to buy foreign currency online?
Story sponsored by The Currency Shop.
Whether you buy foreign currency for travel or investment, it's always better to get the most bang for your buck.
If you're going abroad, some people advise purchasing a significant portion of your pocket money when you arrive in the locality. Meanwhile, others recommend exchanging your funds before you jump on the plane.
Another alternative is purchasing foreign money on websites and other digital platforms. Today's technology has made the process more convenient and accessible for anyone regardless of their location.
Buying foreign currency can also end up being cheaper than going to money changers or banks. Here are the reasons why:
1. Find the best exchange rates
You will need to invest time and effort in researching for top deals online. Fortunately, there are websites that allow you to compare some of the best online exchange rates for free.
You just need to type in the amount you want to convert, and this tool automatically pulls up information from various sites. You can evaluate the different deals and see which platform offers the most value for your money.
One crucial thing to remember when looking for the best exchange rate is that various financial institutions offer different prices. These figures may differ from the mid-market or interbank exchange rate, which is the number that shows up on search engines.
The mid-market exchange rate also rises and falls all the time, depending on these factors:
- Inflation: Inflation is the increase in the price of goods and services in a country's economy for a period. Nations that have a lower inflation rate, meaning the rise on the cost of their items are slower, have a higher currency value.
- Interest: Accompanying inflation are high-interest rates. An increase in this factor can result in a rise in the value of a country's currency because it would provide better profits to lenders and encourage foreign investors to invest.
- Current Account: This factor pertains to the balance of payments. A country that's spending more on importing foreign products while earning little on export can cause depreciation and reduced exchange rates.
- National Debt: The amount that the government borrows from the World Bank or other international institutions can affect its current account and, ultimately, its exchange rate. The higher the national debt, the lower the value of a country's currency.
- Politics: Exchange rates are also closely tied to the political situation of a nation. If a country is going through war and related crises, you can't expect tourists to visit or investors to put in money where there is instability and uncertainty of profit.
2. Avoid withdrawal costs
When you shop for foreign currency online, you don't need to withdraw cash from your bank just to convert it into another currency. You can use your credit card for the funds and complete the transactions digitally.
Sometimes, when you use the ATM, you get charged with a withdrawal fee, especially if the machine is not from the bank you're using. This money could have been added to your travel funds or investment portfolio. You can avoid these extra charges by buying foreign currency online.
3. Save on shipping fees
Some websites also provide incentives to their users upon reaching a particular amount of purchased foreign currency. One perk is having no shipping fee when you order a significant sum of money. With this, you can get more value for the funds that you need to convert, and you get to use it in any way you want.
4. Minimal commission fees
Banks and other major financial institutions are notorious for reduced exchange rates. They have additional charges for their service that they deduct from the final amount that you receive, and you end up with a more significant financial loss.
Online platforms operate with fewer expenses so that they can offer the best exchange rates to their customers. But don't worry, they're still doing everything legally. It's just that going digital allows them to save on overhead costs and other related expenditures for their business.
5. Convert only the amount you need
Another advantage of buying foreign currency online is that you can use up the exact amount you want. This is because the process is more straightforward.
You can send and receive the funds directly to your account, so you can easily convert more funds when you need them. You no longer have to buy a considerable amount of money and convert them back if you don't spend them all on your trip.
Conclusion
Buying foreign currency online can be cheaper if you research diligently. Some platforms allow you to compare exchange rates and find the best deals. You also avoid additional costs from withdrawing cash, as well as shipping and commission. Moreover, you have the option to convert the amount that you need.
Story sponsored by The Currency Shop.
