All set for your trip abroad? Here are five easy ways you can buy expensive foreign exchange for cheap.
Excited about that international holiday trip? Tickets booked? Visa approved? Awesome! But before you take off, be sure to get your money sorted. By money, we mean the currency of the country you’re headed to.
Let’s start with the basics. When you’re going to another country, you will have to spend in the destination country’s currency. While many people use their international Debit or Credit Cards to transact while traveling abroad, it never hurts to have some cash with you.
What is FOREX?
FOREX is a semi-acronym for foreign exchange. The word is a technical term for the foreign exchange market, a highly liquid and decentralised trading platform where countries exchange currencies.
Travelers usually get their foreign currency from banks or money changers by buying forex cards or the currency itself. Some even buy currency from the airport. Money changers and banks usually have a margin that is used as a collateral deposit. The margin rate varies from 18% to 3% depending on who you are buying your currency from.
How to Buy Foreign Exchange
You can buy foreign exchange from a bank, a money changer or an online foreign exchange portal.
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Buying Forex from a Bank
When buying forex from a bank, you will probably have to operate on cash-for-cash basis. You will have to furnish a copy of your passport, your air tickets and an approved visa to be able to get the money. You can either get cash or buy travelers cheques. You could also get a travel Debit or Credit Card. Banks operate at a margin of up to 2.5%.
Place a request with your bank (over phone or online – if you have internet banking) to convert your desired amount of money into foreign currency. Some banks have doorstep delivery of the currency/card if your request exceeds a certain amount. However, you could always walk into your nearest branch and collect your foreign exchange.
Additional Reading: All About Multi Currency Travel Cards
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Buying Forex from Money Changers
This process is similar to that of buying forex form a bank, but you will have to transfer money to the money changer’s account before getting your foreign currency. Cash payments are restricted to Rs.50,000. If you need more you could always opt for a NEFT/RTGS transfer from your account to get the money.
Money changers operate at a margin rate of up to 3.5%.
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Buying Forex on Online Platforms
With the onset of the digital revolution, buying forex has become a lot easier. There are several websites that allow you to buy forex online and deliver your currency (whatever form you want it in) to your doorstep.
The online portals serve certain locations only. When you log on to one, you have to enter your location, the currency you need and the rate you want it at. Yes, online portals allow you to choose from a range of exchange rates and set up an alert for it. You will need to furnish you e-KYC documents for verification.
You can either make the payment online or get a “cash on delivery” option – just like buying a product online. Online portals operate at a margin that’s just 0.5% above the interbank rate but add a 15% service tax for the facilities offered.
Additional Read: Are You Financially Ready To Travel Abroad?
What to Consider Before Buying Forex
- Start planning the finances of your vacation at least a few months ahead of your trip.
- Keep track of the exchange rates and observe the fluctuations in the market.
- Do your research. Look for the cheapest margin rates available offered on the market.
- After you figure out how much you will need on your trip, convert your money on a 30-70 basis. Keep 30 percent of the money as cash in hand and transfer the rest into a travel card. You get better rates on Forex cards than on cash.
- Buy your forex beforehand. Buying it in India is always cheaper than buying it in your destination country.
- When dealing with a money changer or an online portal, always make sure they are RBI regulated and authentic. Watch out for black markets while buying foreign exchange.
- Always choose to transfer funds electronically. Should something go wrong, there will always be a track of the transaction and tracing it will be easier.
- It’s best to avoid buying from airport outlets because they operate at a pretty high margin rate of 16% to 18%.
- Keep a spare travel card for emergencies. Intimate your bank that you will be travelling abroad and would need them to flex the withdrawal limit at any given time.
- If you are operating with a travel Debit or Credit Card, get a chip-based card as they are more secure and are widely accepted around the world.
- Buy foreign exchange in bulk for a better conversion rate. You could also enjoy doorstep facility if your amount is higher.
Check This: Travel Insurance Plans For Globetrotters
Traveling abroad is an expensive affair. Have you considered getting an air miles Credit Card?
What’s an Air Miles Credit Card?
Credit Cards usually come with amazing rewards and cashbacks. An air miles Credit Card is specifically loaded with travel offers – especially flights. Signing up for an air-miles card ensures massive joining perks and free flight tickets with premium airlines. Perks also include airport lounge access and points that are redeemable on other flights.
Check This: Everything You Need To Know About Airline Credit Cards
Collect air miles by spending with your card and redeem it for flight tickets. Most Credit Cards offer a speedy redemption process. It’s best to look for a card that offers air mile benefits on multiple purchases.
Ready to grab some free air miles? Check out the best Airline Credit Cards in India