As you’re preparing to live overseas or travel for an extended period of time, it’s important to know how you’ll get cash. Credit cards are ubiquitous in most countries. But, there’s still the odd moment where you’ll need cash – and, depending on your destination, cash may be the only option. At the very least, taking out cash to make your daily purchases can help you stick to a budget and make sure you’re not overspending on your credit cards.
In the past, we’ve written an explanation of how foreign exchange rates work; today, here’s our guide to how to exchange foreign currency. There are many ways to trade one nation’s currency for another. Some are better than others. Stick to these rules to save money each time you exchange currency and get the best rates possible.
Don’t exchange cash before you go
There’s a lot of confusion around whether or not you should exchange cash in your home country before departing. Some travelers prefer to have at least a little cash on them when they land. But, if you’re looking for the best exchange rate, it’s better to wait until you arrive to exchange currencies. Bring the bare minimum, as overseas exchange rates are higher than getting the right currency in-country.
“Some tourists feel like they just have to have euros or British pounds in their pockets when they step off the airplane, but they pay the price in bad stateside exchange rates. Wait until you arrive to withdraw money,” writes travel expert Rick Steves.
Avoid exchanging cash at an airport
Airport currency exchange kiosks are notoriously bad deals. “Airport currency kiosks, as well as those located near popular tourist areas, generally come with a larger exchange margin and more fees. If you changed dollars into the local currency when you landed in your destination airport, then changed your leftover foreign currency back into dollars before flying home, you’d end up losing money twice,” writes one expert.
It’s better to exchange currency at a financial institution than at an airport. There will still be a small fee for making the exchange at a bank or credit union. However, you’ll get more money for your money than if you visit a tourist rip-off.
Use an ATM to get cash
Instead of exchanging notes, get cash straight from the ATM. You’ll get a better deal, since ATMs use the current bank rate. Some banks have no foreign transaction or ATM fees, allowing you to withdraw cash in the local currency.
Other banks charge ATM fees of $1 to $5, and a debit transaction fee of up to 3%. Do some research to find the card with the best rates and minimize the number of withdrawals you make from the ATM, taking out a larger sum each time, to keep charges under control. Make sure you let your bank know before you travel abroad to ensure they don’t lock your card for seemingly fraudulent charges.
Swipe your credit cards wisely
Credit cards can come in handy, especially during a big life transition like starting a new job overseas. But it’s easy to let credit card spending get out of hand – especially given the fees and charges that some credit companies take on to international purchases. As with the debit card, find a credit card that doesn’t charge any foreign transaction fees.
“Most credit cards charge a foreign transaction fee of between 1% and 3% whenever you buy something abroad, but this is still the safest and often the cheapest way to make a large purchase. You’ll almost always come out ahead on the conversion since credit cards add their fee on top of the Interbank rate,” writes one travel expert from Fodors. Set aside your credit card to use for big purchases only, and try not to take a cash advance on your credit card unless it’s an emergency.
Another good tip: pay in the currency of the country you’re in. When completing a transaction, you might be asked whether you wish to pay in USD or the local currency. Always choose the local currency. “If you pay in USD, not only will you get charged an inflated exchange rate but there is also a hidden 3-3.5% fee associated with this privilege.”
Don’t forget: exchange rates apply to money transfers
Many travelers and expats forget that exchange fees also apply to money transfers. Make sure you get the best possible deal each time you send money home to friends and family. Not all transfer methods are created equal: a transfer agent like OFX, for example, has an exchange rate markup of less than 1%, while MoneyGram can charge up to 4% on exchange rate markups.
Blockchain money transfer options are growing in popularity, mostly because this transfer doesn’t rely on banks. This means you can exchange currency at a lower cost (and faster, too!). Shop around to find the best option that won’t take advantage of an exchange rate to take your hard-earned cash.
This article was originally published by SendFriend
Ever since cryptocurrency entered mainstream consciousness a few years ago, Bitcoin has dominated headlines, with Ethereum a close second. Bitcoin, Ethereum, and Ripple are the top three cryptocurrencies by market cap; but, unlike the first two cryptocurrencies, Ripple is a little more complicated – and has a lot more to offer the crypto market.
Ripple is actually a platform first, and a cryptocurrency second. While Ripple is perhaps best known as a cryptocurrency, it’s mainly a digital payment network and protocol. The technology functions more similarly to SWIFT, the traditional international money transfer network used by banks and financial institutions. For those just learning about cryptocurrency, Ripple offers a more accessible platform for understanding this market and making smart investment decisions. Here’s how Ripple works and the main advantages of this technology.
How does Ripple work?
Ripple is a blockchain system that owns a currency. XRP is the name of Ripple’s cryptocurrency, most of which is held by Ripple, the company. Currently, Ripple owns approximately 60 billion XRP and can sell up to one billion per month. More importantly, however, is the blockchain network operated by Ripple, called RippleNet. The infrastructure of RippleNet is designed to support fast, convenient transactions, making Ripple the preferred cryptocurrency and blockchain solution for big financial institutions and the “unbanked” population.
There are some key differences between Ripple and other crypto-networks that can help understand how the platform functions. First, Ripple uses a “unique distributed consensus mechanism through a network of servers to validate transactions.” This is different from the traditional blockchain mining concept, where users search for tokens to add new Bitcoin and verify transactions.
A key difference in the way that Ripple works is that it specifies a path for a money exchange. For example, if Bank A wants to send a money transfer to Bank B overseas, Bank A must specify “by which gateway (other banks, institutions, or individuals) it is connected in the Ripple network” to Bank B. Then, once the transaction is formed, it gets sent to a validator. The validator takes the transactions, turns them into proposals, sends those proposals to other validators, and then participates in a vetting process. Proposals that get more than 50% consensus in the first round must participate in three more rounds before being approved. The goal is to weed out “transactions that are somehow doubtful or clearly wrong, such as instances of double spending.”
Ripple’s mechanism has the advantage of using less energy while enabling instant verification of transactions without any central authority figure directing traffic. It’s a win-win for many companies: Ripple is decentralized, yet faster and more reliable than other blockchain networks.
On RippleNet, the company has carved out a niche in hosting cross-border payments. American Express is just one of the companies that’s taken advantage of Ripple to move corporate funds between the US and the UK, with no lag time. It’s just the beginning for what the company sees as an opportunity to bring banking to the “billions of 'unbanked’ people who currently lack a convenient way of moving that money across borders.”
xCurrent and xRapid are Ripple’s two main cross-border transfer payments. xCurrent, Ripple’s most highly adopted product, enables participants to message, clear, and settle transactions. It’s quickly disrupting SWIFT, which can take a few days on average to settle payment.
The benefits of using Ripple
Faster, trusted transfers are just the beginning of what Ripple can begin to offer the market. Like other blockchain networks, Ripple does not depend on one central authority to manage and secure their database of transactions. As a result, confirmations get approved quickly and securely.
Another advantage the company enjoys in the crypto market is Ripple’s stake in their XRP cryptocurrency. Ripple owns about 60% of all XRP in existence. That gives the company a valuation of at least $20 billion. It’s an incredibly powerful position to be in where Ripple can completely revolutionize the way transfers happen, taking on the outdated SWIFT method more rapidly than if Ripple had to raise funding.
The so-called unbanked population globally is about two billion people. These are people who do not have access to a bank account or financial institution, relying exclusively on cash to buy and sell goods and services. The World Bank points to lack of access to banking as a perpetuation of poverty: “bank accounts have an important part to play in the founding and expanding of businesses, making transactions more efficient, secure and transparent and managing savings.” There’s a lot of potential for Ripple to help expand access to banking through efficient, cross-border transfers that have virtually no transaction fees