Ben Todd | Jun 3, 2017 | 2
The Cheapest Ways To Get Your Currency Exchanged
Many of our articles have considered the different ways to exchange currency and transfer money. We have discussed the best way to find a good exchange company, what you should look for in an exchange company, and the ways they make money. Now, we consider what you can do to save as much money as possible when you exchange currency.
Note, if you want an easy, safe, and cheap way, consider using Transferwise to convert your currency. We consider it the best money transfer service and one of the cheapest out there.
The Secret Way That Is Suuuuuper Difficult To Do
Find another person in another country who has the currency you desire. If you have dollars and you want Indian Rupees, then find a person in India who wants dollars. Look at the current exchange rate on Google and swap your money at that rate. Doing this means that you do not have to pay any fees, and you are getting your money at the current exchange rate rather than the lowered/skimmed rate that currency exchange companies give you. Plus, when you exchange currency with another person, you are both getting a good deal because the perks involved will apply to you both.
Lower your potential losses by only swapping smaller amounts. For example, if you wish to convert $1000, then you send $200 and the other person sends over the correct amount, and then you send $200, and the other person sends over the correct amount, and so forth until you have converted your $1000.
There is a chance that the person you collaborate with is going to run off with your cash. One of you will always have to go first when transferring, and it is only fair to take it in turns. Transfer less per transaction, and you lower your potential loss.
Remember to use a transfer system that doesn’t require any form payment for your transfer transactions. Remember that you have your currency and the other person has their currency, and remember that you need a place to put your foreign currency.
It is imperative that the account in which you hold your foreign currency doesn’t charge you money for holding it. You should also make sure that you are not paying a fee for sending or receiving money from your overseas partner.
The Not-So Secret Way That Requires Luck And Patience
Currency traders make money by buying one currency and selling it for a profit in another currency. They buy low and sell high. It is like they are buying rare metals and waiting for the price to rise before they sell. It is similar to buying a cheap house and then waiting for housing prices to go up.
You can do the same if you are willing to do a little work for it. Set up a currency alert with an exchange company. Below is an image showing the alert system that Transferwise has. Many exchange companies have a rates alert system. The Transferwise currency exchange company is good because they do not insist that you sign up in order to use their tool.
Set the tool to alert you every day, or to alert you when the rate reaches a certain point. When you receive alerts that say your desired currency is very cheap, then buy them up and save them. You may then use them from your vacation, and/or you may reset the alert to tell you when the price of your foreign currency is high so that you may make a profit.
Try A Currency Marketplace
There’s a number of new companies trying to pioneer a cheaper way of sending money. There’s a lot of techno voodoo involved, but the important thing is that you can save a lot of money if you transfer money abroad from one currency to another.
Transferwise Currency Conversion – Check What You’ll Get
Another company that offers an online marketplace for currency exchange is CurrencyFair (see our CurrecyFair review). You may make an exchange with them right away at whatever rate they offer, or you may set your own rate and put your money on their online market.
You set the amount of money you would like in return by setting the rate you would accept. Your money then stays on the market until a person who needs your currency comes along and buys it at your rate. It takes very little maintenance besides actually putting your money on there and setting your exchange rate.
The special thing about an online marketplace like the one that CurrencyFair has is that your exchange rate doesn’t depend on the most current exchange rate. The money you get for your cash will depend on the rate you set, and will depend on other people’s willingness to pay the rate you set.
In addition, if you are looking to buy a currency, then the online market may have been flooded with that currency just recently, which means you will get a better-than-usual rate when buying. Again, you do not need to worry about maintaining your money on the market because everything is done for you, all you have to do is enter the rate you wish to exchange your money at. After that, you sit back and wait for your money to be exchanged at the rate you demand.
A Reminder About Exchange Rates And Fees
A company that offers to exchange currency will make money in two ways. The first is with fees, and the second is by taking a slice of your exchange rate.
If the current exchange rate is $1 buys 0.90 Euros, then an exchange company may make money by offering you a rate of $1 buys 0.85 Euros.
Another way that exchange companies make money is to charge you fees, and many of them are hidden. For example, a company may say that its exchanges are fee-free, but they may charge for currency deposits or withdrawals. They may charge to keep your account open, may charge you to send money, and may charge you for receiving money.
Conclusion – Cheaper May Mean A Bigger Risk Of Loss
If you were to try the free method for converting your currency, then there is always the chance that the person you partner up with may run off with your money in some way. After all, when you exchange, there is always the chance that the other person will not exchange back. Take it in turns and be as fair as possible without being silly. The methods mentioned above are cheap (and sometimes free), but with that benefit comes an increased risk of loss.