Looking to travel abroad?
When setting your budget, it's important to consider currency issues. This post covers:
- Currency trends and choosing a destination.
- How to save on the cost of changing your money.
The value of your currency relative to another, combined with the cost of living at your destination, will affect where you go, when you go and what you do when you're there.
Here's a brief summary of where the four main countries (the United States, Canada, the UK and Australia) that read Solo Traveler are at in terms of the value of their currency and destinations.
Where to Go Based on Your Currency
When I did the 2016 to 2015 comparison last year, the Brits and Americans were standing strong and Canadians and Australians were suffering under a weak currency. Now, comparing 2017 to 2016, it is the Brits who are enduring a major currency struggle. The US has made small gains against the Euro, more against the GPB, but has lost ground against the Canadian dollar. Canada has gained some ground against all currencies we're looking at as has Australia.
Europe – Americans, Canadians and Australians all pay less for a Euro this January compared to last. For Americans, it's a 3-cent difference while Canadians and Australians are on the positive side by 6 cents. For Brits, 1 GBP will buy 1.18 Euros compared to 1.30 last year.
United Kingdom – It's cheaper to go to the United Kingdom for everyone. For Canadians, last year the GBP was 21 cents more than the year before. This year it is 35 CAD cents less which is a net gain of 14 CAD cents. Australians have a similar gain of 33 AUS cents while American see a gain of 26 US cents.
Canada and Australia – With currencies that continue to be on the weak side, both Canada and Australia remain good destinations, especially for Americans. Given that 2017 is Canada's 150th birthday it is likely a good time to visit.
Click here to see trends in foreign exchange rates in a variety of currencies.
So, what do you do with this information? Here are my travel tips for changing money.
Travel Tips for Saving on Currency Exchange
- Avoid currency exchange fees completely. You won't be able to put everything you buy on a credit card but if you can, do it with a card that has no foreign transaction fees. This way you'll avoid fees altogether and get your best deal on currency conversion. As a Canadian, I use the Amazon.ca Visa card which has no annual fee. In the US, there are a few Chase cards that American travel bloggers recommend. And, of course, at checkout always choose to be charged in the local currency.
- Get cash at your destination using an ATM. Rather than buy a currency before you leave wait until you arrive at your destination and use an ATM machine in town. The fees will be lower and if you have a bank account that waives the foreign transaction charges all the better. You'll save a couple of dollars on every transaction. I have a TD Canada Trust Select Service checking account which does this.
- Time your purchase of cash. If you know that you're traveling to a particular destination in the next few months, or even in a year, track the currency and buy when it seems like a good deal. Not sure? Hedge your purchases by buying every couple of months and you'll get, more or less, the annual average – no big win but no big loss either. Unless the value of the exchange has moved significantly in your favor, 3% or more, you're still likely better off getting the currency at an ATM at your destination.
- Understand the exchange rate on purchases. Use a currency conversion app to know the real cost of what you're buying in your own currency. In addition, have a basic understanding of the currency so you can do a simple calculation in hour head without pulling out your phone.
- Buy what you can at your destination – And if your currency is strong against the currency of your destination DON'T buy things like day tours or travel gear in advance. You'll be paying in your own currency. Use a card with no foreign transaction fees or exchange your currency and buy when you're there.
And finally, avoid foreign exchange kiosks. They are expensive.
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- Your Currency or Theirs? The Decision Makes a Difference