Are you traveling outside the euro zone? Everything you need to know about currency exchange

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How much money do I have in cash? Do I change the money here or at the destination? Is it better to pay by card or cash? How much is the currency exchange? These are some of the Questions you will be asking yourself about currency exchange if you are traveling outside the euro zone. And it is that being clear about how the currency exchange works can save you a lot of money and headaches.

What is the exchange rate of a currency?

The exchange rate is the ratio of the value of one country’s currency to that of another. That is, how many euros do you need to buy a dollar or, seen another way, how many dollars will you get for each of your euros.

Currency exchange or currency exchange?

It’s easy to use them synonymously when they actually refer to two different things.

Currency exchange Currency exchange refers to the exchange of physical bills and coins.
Currency card payment Currency exchange refers to transactions that do not involve physical money exchange. An example would be a transfer or card payment in a different currency.

And why is this important? Because the commissions and costs to be paid in one case or another may be different.

How is the exchange rate of a currency fixed?

The rate or exchange rate is the price of the currency, a price that never remains stable. Currency prices are constantly changing according to the economic and social strength of the country, among other things.

The financial markets collect this price, as do the European Central Bank (ECB) and the Bank of Spain (BdE). However, they do so for informational purposes only.

Later, when you have to change currency, exchange houses may apply a different exchange rate, in addition to charging commissions. This type of change is established with ratios such as 1: 1.5. In this example, for every euro you contribute, they will give you 1.5 units of the local currency.

How the currency exchange works

In an exchange office you will find two different rates:

Buyer change The buyer change

It’s what you pay when you buy a coin

Seller change The seller change

It’s what they pay you when you sell that coin

Typically, the buyer’s exchange rate is lower than the currency’s exchange rate and the seller’s higher. For example, if the currency exchange is 1: 1.20, they can offer you 1: 1.15 when buying, but 1: 1.25 when selling.

Depending on what you want to do, you should look at one or the other. Besides, also you have to ask about the commissions that the exchange house may apply.

A concrete example
You want to change € 100 to dollars and you have two options.

Currency exchange A Exchange house B
Exchange rate $ / € 1.15 $ / € 1.20
Commission 0% 10%
Currency you will get $ 115 $ 108

In this example, exchange A is better than B, but it could be the other way around, and that it would compensate to have commissions so that the exchange rate was better.

What if you pay by card? Then the exchange rate will be the one used by the issuing entity. Thus, one can speak of the Mastercard currency exchange, Visa currency exchange or the interbank exchange rate, which is the one that large banks offer to other banks.

The advantage is that this exchange rate is usually much more advantageous than that of exchange houses, even taking into account that it is normal for your bank to charge you a small commission on that exchange rate.

Where and how can you exchange foreign currencies?

There are more than one option to change currencies and get money from the country you plan to travel to, both before doing so and at your destination.

Ideally, you should change at least part of the money in Spain before your holidays. This way you will have money to move around the country as soon as you land and you will avoid paying more later. And it is that, normally, the exchange rate that you will get in the destination will be worse.

Whatever you do, these are options to change currency:

Currency exchange ING

In your bank before traveling

The most common option and also the most recommended for the initial money of the trip. To make sure you have the money on time, give at least a week’s notice. If you are an ING customer, you have the foreign currency exchange service, with which you only have to indicate the amount you want to change and you will have your money at home between two and four business days.

Airport currency exchange

At the airport before and after flying

It is the second most common option, but also one of the most expensive. The exchange rate that the exchange offices at the airport will apply to you is far from being the best, as are their commissions.

Exchange houses

In exchange houses

One of the formulas for exchanging money in the destination country. Each house can apply a different exchange rate, so you will have to compare several to find the one with the best offer.

Hotel currency exchange

At the hotel

A very comfortable and safe option, although possibly not one of the cheapest. The exchange rate will usually not be the best and there may also be limits on the amount of money you can exchange.

Withdraw cash from abroad

When withdrawing money from ATMs

A different way to get local currency. Before doing so, you should check the exchange rate that applies and the conditions of your card. Depending on your bank, they may charge you fees for cash withdrawals abroad, and there may also be an additional fee from the ATM itself.

Currency exchange pay card

When paying with the card

Instead of getting local currency, you can also pay with your card abroad. In fact, you can even pay with your mobile outside of Spain. In doing so, the card’s exchange rate, which is normally the most competitive, will be applied.

Pay in euros

Pay in euros

In some countries they will accept that you pay in euros. In these cases you must be careful with the exchange rate they want to apply, as well as the price of what you are buying. When it comes to countries with heavily devalued currencies, where one euro equals hundreds of the local currency, you may end up paying more than the bill for the same.

When paying with a card abroad, which is better: local currency or euro?

Paying with a card is one of the best ways to save on the currency exchange. The reason is that their exchange rate will normally be better than that of the exchange houses in the country. In addition, in all the purchases you make, the card’s purchase insurance will be activated and, in the case of a credit card, any other insurance that is linked to it.

What you must bear in mind is that, if you are going to pay with a card, the POS or dataphone will detect that the card is foreign and will offer to pay in euros or with the local currency. In these cases it is recommended choose to pay in local currency, as your bank will normally apply a better exchange rate.

Which countries of the European Union do not use the euro

If you travel to another continent, you will surely have to change currency, but it is also possible that you will have to do so if you travel through Europe. And it is that not even all the countries of the European Union use the euro. In fact, only 19 have adopted the Community currency.

These are the countries in Europe where you can pay with euros, for the rest, you will need to change the currency:

  • Eurozone countries: Germany, Austria, Belgium, Cyprus, Slovakia, Slovenia, Spain, Estonia, Finland, France, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands and Portugal
  • Countries that use the currency without being in the euro zone: Andorra, Vatican City, Monaco, San Marino, Montenegro, Kosovo

What to do with the money left over from the trip

The money exchange has a way of going and another one of return. It is normal that when you return you have not spent all the money and you wonder What can you do with the foreign currency that you have left over?

To begin, you must be clear that you will only be able to change the tickets you bring, since the currencies are not usually exchanged. Once you decide which coins and bills you want to keep (as a souvenir or for a future trip), you can change the rest to euros.

Just like on the trip, you can do it in an exchange house. The problem is that you cannot know in advance what exchange rate will apply to you and, as we have seen, the exchange rates can be worse. With ING you have the possibility of being reimbursed up to 50% of the currency you asked for at the purchase price. That easy.

In Orange | Vacation guide
Image I Christine Roy

Saving on vacation, Saving on currency exchange

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