3 Effective Tips for Making the Most of Exchange Rates on Foreign Currency
As a professional living and working abroad, your money and personal wealth are incredibly important to you. You’ll want to mitigate any risks or challenges you might encounter when transferring money or receiving payments from a different country.
No matter what, the exchange rates on foreign currency should always be on your mind. If you don't take them into account, you could be losing money on all of your transactions. That’s why you should figure out the important details beforehand. In addition, sending money between two countries can be unreliable and risky if you don't take the right steps.
Here are three effective tips to help you avoid any problems and understand exchange rates on foreign currency:
1. Pay Attention to the Market Rate, Not Just the Fees
Transferring money internationally can incur hefty costs to those unaware of the exchange rate. According to the expatriate blog Expat Women, many professionals worry about the transaction fee while forgetting about the rate. This can be a problem, in part because the fee is often minimal while the rate is where larger costs can build up. Your first step should be to ask what the market rate is, so you can determine whether or not that bank or currency specialist is offering you a fair deal.
2. Consider a Contract
Exchange rates fluctuate throughout the year. If you know that your transaction won't be a one-time deal, consider a forward contract to mitigate risk. This document will lock you in to a secure exchange rate for several months to a year, but you'll have to pay a small deposit up front. The rest of the transaction is settled once the deal is finished. This method is a sound way to budget, since you won't be subject to fluctuating markets.
3. Think about Timing
According to ExchangeRates.org.uk, if you are planning a substantial money transfer, you should watch what is going on in the markets. Since exchange rates shift, picking the right time can help you save a significant portion of your cash. Determine when conditions are most favorable and then act. However, this strategy only works if you have a sound budget and can afford to wait to receive your funds.
Want to learn more? Read on for more information on how to manage your finances while enjoying your life abroad.