Currency Exchange
Convert currency by multiplying amount by exchange rate. $1,000 USD at 0.85 EUR/USD rate equals 850 EUR. Exchange rates fluctuate constantly based on economic conditions, interest rates, political stability, and market demand. Check current rates before traveling or making international transactions as rates change daily.
Banks and currency exchange services charge fees or offer less favorable rates than market rates. Airport exchanges typically have worst rates. Compare options - credit cards often provide competitive rates (but may charge foreign transaction fees), ATMs offer good rates but charge withdrawal fees, specialized currency services might beat banks.
For large transactions, small rate differences matter significantly. 0.85 vs 0.86 rate on $10,000 is $100 difference. Shop around, avoid airport exchanges, use credit cards with no foreign transaction fees, or withdraw cash from ATMs in destination country for better rates than exchanging cash.
Quick Tips
- Always compare APR, not just interest rates
- Use the Rule of 72 to estimate doubling time
- Extra payments dramatically reduce total interest
Frequently Asked Questions
Monitor rates and exchange when favorable, but timing markets is difficult. For travel, exchange small amount before departure for immediate needs, then use ATMs or credit cards abroad for better rates than carrying large cash amounts.
Exchange small amount ($50-100) for taxis, tips, emergencies upon arrival. Then use ATMs at destination for better rates than airport/hotel exchanges. Credit cards with no foreign transaction fees are most convenient for purchases.
Providers add markup to interbank rate to profit. Banks add 3-7%, airports 10-15%, hotels even more. Credit cards offer near-interbank rates but may charge 1-3% foreign transaction fee. Compare total cost including fees.