5 things you need to know about
Currency exchange can be daunting – especially if you travel, conduct international business, or if you send money overseas to family and friends. There are countless factors that affect the value of your money, such as inflation, interest rates, and political stability.
Exchanging money through a bank or credit union generally takes two days and incurs fees that are based on the amount being exchanged and the transaction type (wire transfer or check). But there are several other ways to exchange
currencies at better rates than what banks offer.
In the world of finance, currencies are measured against each other using an exchange rate. For example, one dollar might be worth 0.4 euros or 1 pound sterling. The reason for this is that each currency has its own supply and demand; some will have more demand than others and therefore be worth more in relation to other currencies. But since this changes constantly, there is no way
of knowing what the current rate is unless you check before buying or selling your currency.
So here are five things you should know when exchanging currencies:
The exchange rate is the price of one currency in terms of another
It's the amount of the second currency that you get for each unit of the first currency. So, if you are traveling to another country and want to exchange dollars for euros, you will receive a different amount of euros based on the current exchange rate.
When buying foreign currency, this means that if it costs £1 to buy a dollar (1:1), then purchasing $100 will cost 100 x 1 = £100; however, if it costs 2 pounds to buy a dollar (2:1), then purchasing $100 will cost 100 x 2 = £200.
This is important information because it affects how much money you'll receive when exchanging your money for another currency.
Airports are not the places to change money for the best rates.
Whenever you travel, it might be very tempting to exchange your currency at the airport. They are conveniently located, and you might not want to wait for hours in a queue at the local money changer. However, airports are busy places where there are high rental costs, and more demand for physical cash by travelers. Thisincreases the demand for physical cash in circulation which means that most of
these facilities don’t offer favorable exchange rates compared to those offered by local money changers.
Currencies fluctuate constantly
When it comes to currency exchange, currencies fluctuate constantly. This means that if you buy a currency today for $1 and try to sell it tomorrow for $1, you may find that it's worth less than $1 or more than $1.The value of a currency
can change from day to day and even hour to hour. The strength or weakness of currencies is determined by supply and demand factors like interest rates, inflation rates, economic growth rates, and political stability. When one country experiences a spike in inflation or interest rates, its currency will typically weaken against others until its monetary policy normalises again. On the other hand, if another nation experiences strong economic growth coupled with low-interest rates and inflation, investors may flock to that country's
currency as a safe haven investment option.
The exchange rate you get depends on where you're making transactions
If you're buying a product or service from someone in another country, you may be asked to pay in your home currency, but then have the bill converted into their currency. This is called an international transaction, and it can be very expensive
for you because of the exchange rate. The currency exchange rate you get depends on where you're making the transaction. If you're buying from an online store in another country, the payment processor will use an exchange rate that's favourable to them. If you are transferring money from one bank account to another, then the banks will use their own exchange rates.
In either case, if your payment is processed through a foreign bank, there's no guarantee about what exchange rates will be used — especially if there's more than one bank involved in processing the transaction.
To ensure accuracy in your transactions, we recommend using Tempo – developed by Future Fintech Labs. Tempo is the online money transfer platform that can help you determine the costs of currency conversion before completing any transaction. Knowing the money exchange costs of your transaction by using our easy-to-use conversion tools in the Tempo app can help you make accurate transactions, manage cash flow, and make better decisions about your finances.
Remittance services can offer better rates than banks and may be less expensive
Remittance services offer much lower fees than banks in general because it doesn't have branches or physical locations that need maintenance and staffing costs. This allows some of them to pass on those savings directly to their customers in the form of lower fees on transfers. These money exchange services can also be offered online with better rates than banks, and often with little or no paperwork required. They also provide information about local banking services and the currency exchange rate in other
countries they operate in (or where they have partners).
Currency exchanges performed by banks or other financial institutions could mean high charge fees for these services. And if you are making frequent transactions over time, that's a lot of money! But if you use a remittance service like Tempo, you get lower currency exchange rates and end up saving a significant amount in transaction fees.
Remittance and money exchange platforms like Tempo will let you load funds at anytime onto the mobile app so that you can use them when traveling abroad without having to worry about cash withdrawals at foreign ATMs.
There are countless factors that influence the value of your money, and the volatility of currency exchange can be challenging. Fortunately, remittance platforms like Tempo offer a way to transfer funds and make payments abroad using nothing more than an internet connection and a smartphone.Whenever you are around the world, you can avoid withdrawal and conversion
fees associated with foreign banks, and instead convert the amount in real-time to the currency of your choice. Tempo's low to no-fee transactions and simpler alternative to traditional bank remittances make this service a great option for people sending money to family, buying and selling online, and for frequent travellers looking for a smoother and more convenient experience.
Great news! You can still take advantage of our limited time offer when you download our app today, but don't wait.