Cheap Ways to Exchange Currency

What is currency?

The currency in the USA is the American dollar. It is one of the main reserve currencies in the world. One dollar equals 100 cents. Until August 15, 1971, all US dollars were gold-backed. The right to issue dollars belongs to the Federal Reserve System, which in the States performs the functions of the Central Bank. Besides the fact that the American dollar is the main currency in America, it also has the status of the national currency in other countries, for example, Ecuador.

History of the dollar

The word “dollar” comes from the German “thaler”. It is a medieval coin that was in use in Germany in 1519. Incredibly, the dollar is America’s age. In the 17th century, this word was used for all small coins and small change. The famous “$” symbol was created thanks to the ingenuity of American colonists. Nowadays, paper for the production of dollars is made from cotton and linen in a ratio of 75% to 25%. It is issued a dollar as a velvety, slightly rough to the touch paper. Now the US dollar is the world’s main reserve currency.

Cheap ways to exchange currency

If you are in urgent need of some cash currency, there are three easy ways.

At the bank office

This is the most reliable way. So you definitely won’t run into scammers who exchange currency at a predatory rate or imply hidden fees.

Pros:

  • Safe and secure way.
  • The exchange rates in different banks can be compared in advance on the Internet and choose the most profitable one.
  • As a rule, no commission is charged for currency exchange in offices. You can see the rate of selling and buying currencies and you will not have any additional costs.

Cons:

  • The required amount or denomination may not be in the cash register (it is especially difficult to get small bills).
  • Waste of time: you have to go to the bank and, possibly, wait in line. You need to adjust to the office hours. If you exchange huge amounts, you need an ID.

At the exchange office

All street exchange offices are owned by banks by law. So this method is similar to the previous one, but there are some peculiarities.

Pros:

The rate is sometimes more profitable than in the offices of well-known and large banks. However, even in different exchangers of the same bank, the rates may differ: near the main sights of the city or in a large shopping center, for example, currency may cost you more, and on the outskirts – cheaper.

Cons:

  • Most often there is a commission, but it is sometimes not advertised. You will only know about it when you get money – less than you bargained for. Check with the cashier in advance how much you will be given.
  • The exchange rates cannot be compared in advance: there are no actual statistics on them. You will have to choose from those that you meet along the way.
  • You will also need an ID to exchange huge amounts.
  • Less reliable way than at a bank office. Before exchanging currency, be sure to find out which bank the exchanger belongs to.

ATM

Many are accustomed to withdrawing currency from an ATM and then changing them. But you can immediately withdraw dollars or euros.

Pros:

  • The rate at an ATM is more profitable than at the cash desk of the same bank.
  • Some ATMs work around the clock.

Cons:

  • Not all ATMs issue currency, and most of them are only dollars or euros. But all the information can be found on the bank’s website.
  • Banknotes of the required denomination (small bills and/or large amounts) may not be in the ATM.
  • ATMs are in the area of special attention of scammers. It is better to choose those that are located in large shopping centers with a video surveillance system, or even better – in bank offices.
  • If you need a large amount in foreign currency, but as long as you are not going to cash it out or pay it, you can exchange money online.

Online bank

Pros:

  • It is reliable: you will not be cheated by the cashier by mistake and robbers will not lie in wait to take away a bag of cash.
  • Convenient: the online bank works around the clock.
  • Fast: no need to go anywhere and stand in line.
  • Transparent: the bank informs about commissions in advance. The operations are extremely simple and straightforward.
  • Beneficial: the conversion rate may differ from the exchange rate in the bank branches in a more favorable direction.

Cons:

  • Not all banks are allowed to work with currency, for this you need a special license. But large retail banks usually have this permission.
  • You need to be ready: become a client of the bank, connect an online account, open a foreign currency account (if you have not done all this before).

On the currency exchange through a broker

This is not the most popular way. However, it allows you to save a lot if you need to exchange large amounts into currency. How it works? You need to have a foreign currency bank account. On the website or in the office of a brokerage company, you open a personal account, replenish it from your bank account. Then you make an exchange transaction – you buy currency at the auction. Moreover, you can buy not only euros or US dollars, but also money from other countries, for example, British pounds or Swiss francs. After that, you can withdraw money from your brokerage account to your foreign currency bank account.

Pros:

A much more favorable rate is offered by the exchange rate. The difference between the buying and selling rates on the exchange is always several times less than in the exchange offices. But you can only take advantage of this option if you exchange large amounts.

Cons:

Preparation required: you need to open a personal account with a brokerage company. To do this, you will have to come to the broker’s office, but sometimes everything can be arranged online. You also need to open a foreign currency bank account to which you will transfer the currency.

You need to pay a commission by the broker. Be sure to specify how much it will be. For example, the commission for the purchase and sale of currencies can be negligible. But the withdrawing money from a brokerage account to a bank account can take, for example, 30–40 euros. Other payments are also possible, for example, for keeping an account. Your broker should recommend you in advance of all commission and payment options and what obligations may be associated with them.

Category: Finance

Tags: currency exchange, financial