Author, Mike Smith
Last Updated on June 4th, 2024
When you need foreign currency, the exchange rate is one of the most crucial factors to bear in mind.
This is equally important whether you’re planning a holiday, investing in property abroad, or sending funds to family overseas.
Securing a favourable exchange rate will significantly impact how you maximise your finances.
This comprehensive guide offers clear and concise advice on finding the best exchange rate.
What Do I Need to Know About Exchange Rates? (Before making decisions!)
An exchange rate is a rate at which one currency will be exchanged for another currency. Most exchange rates are defined as floating and will rise or fall based on the supply and demand in the market. Usually, exchange rates change every 2-3 seconds.
There are a huge number of factors that drive exchange rates which makes them hard to predict.
Should you need expert advice, a currency broker can offer professional and well-informed guidance on your international exchange.
How Can I Get the Best Exchange Rate?
Before you commit to exchanging foreign currency, whether for travel, business purposes, or other personal reasons, remember that thorough research is key. A good place to begin is looking at the current exchange rates on offer, which you can do by speaking to your bank or viewing online currency transfer companies.
It’s vital to remember that rates can vary between providers, so by comparing multiple sources, you can get a wider perspective on the prevailing exchange rates.
Below, we have outlined a simple step-by-step guide on how you can the best exchange rate.
1. Compare Providers.
Compare rates from different providers, including banks, specialised exchange platforms, and money transfer services.
2. Consider Fees.
Factor in any potential fees, including foreign transaction fees or currency conversion charges.
3. Hedging Strategies.
For large transactions, explore hedging strategies to mitigate the risk of unfavourable rate movements. In such cases, we would strongly advise speaking to a currency broker.
Why are Exchange Rates so Important?
Simply put, you are effectively losing money on every pound if you transfer money abroad or exchange currency at anything other than the best foreign exchange rate.
This is much more relevant should you make large transfers, for example, the purchase or sale of a property abroad.
In these cases, even the slightest shift in the rate will considerably impact the final funds.
Exchange rates are typically quoted in pairs, such as GBP/EUR, indicating the value of one currency in terms of another.
The ‘base’ currency is the one you have, while the ‘quote’ currency is what you want to acquire.
For example, if the GBP/EUR exchange rate is 1.20, this means that one GBP is equivalent to 1.20 Euros.
Researching rates thoroughly and using a currency broker with a team of experts working on your behalf will always be a good way of navigating unpredictable FX market fluctuations.
Where to Get the Best Currency Exchange Rates?
- Speak to your Bank
You can speak to your bank either in person or by telephone and ask for a rate on a certain amount of currency you wish to exchange.
Sometimes banks can offer decent rates for account holders. But, watch out for those hidden transfer fees!
- Get a quote from a Currency Broker
Currency brokers, such as Key Currency can be the best way to transfer a large sum internationally.
Especially where costs, communication and timing are so important. They can give a live trading price (customer rates!) which avoids any unpleasant surprises along the way.
- Use currency conversion apps
Apps like XE, OANDA, or Currency Converter Plus give you real-time rates. These can be a lifesaver when you’re on the move.
- Monitor the Market
Exchange rates fluctuate daily. Monitor the market trends and strike when the rate is favourable.
- Plan ahead
If you know you’ll need foreign currency for a scheduled trip, plan! Rushing to exchange money at the last minute usually leads to poor rates.
Remember the ‘best’ rate can vary depending on your specific needs and how long you have to choose the best time, so take some time to research and compare options.
It could save you a tidy sum when you need to make an international money transfer or any other financial transaction!
Timing is crucial!
Exchange rates change rapidly due to various factors, including economic reports, geopolitical events, and market sentiment.
For example, consider a scenario where you plan to transfer £10,000 to euros for a business transaction.
If the exchange rate shifts from 1.20 to 1.15, you will receive 500 euros less due to the timing of your transaction.
This example is an excellent way of understanding why monitoring rates and acting at the opportune moment is crucial.
If this all seems confusing, an expert currency broker can talk you through the finer details.
If you are looking at changing money over some time, with a currency specialist, you can protect yourself against such a disappointment by locking in a reasonable exchange rate to use for up to two years.
This simply means that you won’t miss out even if the rate shifts out of your favour by the time you’re ready to make your international money transfer.
What to avoid when deciding on exchange rates
For both travel and international money transfers, unfavourable exchange rates and hidden fees can eat into your funds.
You will most often find these two issues when using traditional methods of exchanging money, such as banks or credit unions.
One surefire way to make your money work harder for you and avoid these pitfalls is to consider alternative options like money transfer services.
Key Currency has a dedicated team of experts who watch the international exchange rates all day, every day. To be able to benefit from the expertise of the team is a simple process. First, you need to register with Key Currency online or over the phone. This only takes a few minutes and is quick and easy. This is simply a safeguard against money laundering and is required by law. Once you are registered, you will speak with an account manager. They will need to know the amount of money and the currency you wish to exchange it for. The account manager will answer any questions you have and give you an exchange rate that, rather than being fixed, is up to date with current rates and inflation. Key Currency offers money transfers for personal or business transactions with an ‘Excellent’ Trustpilot Rating from over 2,000 reviews. Forecasting exchange rates is ultimately about making an informed judgement based on probability and using that to your advantage. If you would like to find out our international transfer rates or be kept abreast of market trends and upcoming news and events, request a quote below!Obtaining the best rate and maximising funds with a Currency Broker
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