Foreign Exchange Top Tips

        

What is Foreign Exchange?

In it's most basic form the term Foreign Exchange describes the buying, selling and exchange of currencies on a worldwide scale. The Foreign Exchange market is the term used to describe the location of this trading, sometimes referred to as FX, Forex or the currency market it is the environment used to exchange and trade currencies. It operates twenty-four hours a day to accommodate different time zones and operates from on weekdays, fifty-two weeks of the year.

The value of any individual currency is decided by market forces based on trade, investment, tourism, and geo-political risk. For example, every time you travel, you pay for goods and services using the currency of the host country, this involves you exchanging the currency used in your home country for the local currency. Currency exchange of this kind is one way in which we use Foreign Exchange. Another way in which Foreign Exchangeoccurs is when a business desires to trade with a business in different country. Frequently, the foreign company will have to pay in the local currency. Another way in which Foreign Exchange is used is through the investment of funds in overseas investments.

When using Foreign Exchange services, it is advisable to do your research and plan in advanced.When planning a trip abroad it can be easy to leave it to till the last minute to change your money, but it can prove much more financially rewarding to plan ahead. Checking with your bank or using a Foreign Exchange specialist can usually ensure you get the best rates and in some cases the money can even be delivered to your home. Another incentive to plan ahead is that Foreign Exchange services available at airports, train stations and other tourist locations tend to offer the worst rates or charge high commission and transaction fees, eating into your spending money.

Tip 1: Research the exchange rate

When searching for the most competitive Foreign Exchange rates the best way to tackle it is to use the internet and comparison site such as www.whichwaytopay.co.uk to establish what the average exchange rate is for your desired currency, this will help you decide where to change your money. Another good idea is to contact Foreign Exchange brokers to ask them if it is a good time to buy, and check the exchange rate on the day to give you a rough idea of what you should be expecting for your money.

Commonly the most competitive exchange rates are found online, so ensure you have checked on Internet comparison sites to compare the rates offered by different financial providers They will usually deliver the money to your home or allow you to pre-order and collect it from one of their high-street branches.

Tips 2: Be aware of commission fees

Wherever you decide to exchange you money; from a bank, to a high-street Foreign Exchange service or over the Internet, it is always a good idea to find out the commission fees they charge. As these can prove costly. The base case scenario you want to find a Currency Exchange provider that offers a strong exchange rate and a low commission fee. Be wary of moneychangers that advertise 'commission-free' services, they are not as good as they appear and usually offer poor exchange rates to recoup costs.

Tip 3: Know the 'buy back' rate

If you have any foreign currency remaining when you return from your holiday, try to return it to the place where you bought it in the first place. Many currency exchange providers will buy back your money commission-free if you have your receipt. However in general changing back currency usually means it loses value leaving you out of pocket, it may therefore work out better to change money up on an as and when basis on your trip.

Tip 4: The more you exchange the better the deal

Generally the larger the sum of money exchanged, the more competitive the exchange rate will be. Some money providers charge fixed commission fees no matter how much money you change, so it's in your best interest to change a larger amount.

Tip 5: Request smaller denominations

Since many retailers and restaurants abroad don't like large notes, so try to ask for notes in smaller denominations if they have them.

Tip 6: Avoid paying in your home currency on card payments

When you're paying for goods or services abroad with a card machine, always opt to pay in the local currency. Although it may seem appealing to pay in your own currency, they will offer a poor rate, and can come with fees and charges.

Tip 7: Be cautious of using credit and debit cards abroad

When using credit and debit cards abroad, you usually get the best exchange rate. However, the main downfall is that you get slapped with ATM fees, commission and loading fees on purchases. When drawing money out of the ATM, take out bigger amounts at once so you don't have to go to the cash machine too often. Save your card for larger purchases like hotel bills and car hire so you're not constantly paying fees. Try to shop around for a specialist card that doesn't charge ATM and transaction fees, but make sure you pay it off in full within 1 month to avoid being lumbered with debt.

Tip 8: Use a Foreign Exchange Expert

Foreign Exchange expert or currency brokers are able to assist with diverse foreign currency requirements. Their role is to assess your circumstances and requirements, then locate the best possible deal for your personal situations and transfer stipulations.

It is the role of a currency brokers to carefully watch the currency markets and connect currency trends with world news in order to have a comprehensive knowledge of what's affecting market fluctuations. Although they are restricted in offering detailed suggestions to customers, this information enables them to answer questions thoroughly and provide expert assistance. However they do usually charge a fixed fee for their services so its best to exchange large sums of money as it works out to be a better deal.

        


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