Travel Money FAQs
- What are Exchange Rates?
- How can you benefit from Exchange rates?
- How can I transfer money overseas?
- What is a SWIFT number?
Also see our Travel Money Directory
From here you can learn all about the various ways to manage your travel money, the easy ways to opening a UK bank account, the best money transfer methods and paying UK tax!
What are Exchange Rates?
The exchange rate (also known as the foreign-exchange rate, forex foreign exchange rates or FX rate), between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 2.5 Aussie Dollars (AUD, $) to the British pound (GBP, £) means that 1 Pound will buy you 2.5 Aussie dollars. What can be confusing is that you may also see the exchange rate expressed as it inverse. In other words you might see 0.4 instead of 2.5. This is just 1 divided by 2.5. To ensure you get a reasonable rate, it is handy to know both when you are dealing with currencies at foreign exchange counters.
Exchange rates enable trade between two countries with different currencies, there are (i.e. prices at which currencies and the goods and services of individual currency zones), can be exchanged against each other. Currency exchange rates are constantly changing, meaning you can receive more or less of a foreign currency depending on when you exchange your travel money.
Visit our online currency converter and other helpful foreign exchange rate tools.
How can you benefit from Exchange rates?
Just knowing the daily exchange rate can ensure you get a fair rate whilst you are exchanging money.
In addition, understanding the relative value of a currency can mean that you can save more money and it can also help you to choose which countries are good to travel in right now.
A straight forward way to understand how currency values differ is by comparing a single, universal item…. the Big Mac. For over 20 years The Economist magazine has used the Big Mac (sold in over 120 McDonald’s restaurants worldwide), as the form of currency to compare the exchange rates and under or over valuation of a country’s currency.
For example, a Big Mac in the US costs US$3.10 but in Australia, once the Australian dollar has been converted in to US dollars using the current exchange rate, this same burger will cost you US$2.44. Nip over to South Africa and you can pick up a Big Mac for only US$2.11 but don’t bother stopping off for a Big Mac in the UK as it will set you back a BIG US$3.65
For the working traveler this can be a very powerful tool, because whilst buying a Big Mac in the UK is relatively expensive, earning UK pounds can be a fantastic way to save money for great wine whilst in Spain.
How can I transfer money overseas?
A money transfer operates in much the same way as a wire or telegraphic transfer. The money transfer market is constantly growing with person-to-person money transfers (or person-to-self) represent over USD $200billion a year in international flows. Migrant workers sending remittance payments back home, import and exporters, and travellers and expatriates make up the largest sectors of the market.
Companies that offer online money transfers offer lower rates as they don’t have the overhead costs that banks or financial institutions do. Money transfers usually incur a flat money transfer fee ranging from upwards of £7. The money transfer rate will be the same as the current foreign exchange rate, so it is a good idea to check the foreign exchange rate before transferring your money to ensure you get the highest money transfer rate.
For further advice and information on how to process an international money transfer, how to send money orders online or where to get cheap international money transfers and money wires, visit the WORKgateways website on money transfers.
What is a SWIFT number?
If you are not sending money via a (usually cheaper) money transfer service, and you choose to use your bank you may need to obtain your home bank’s SWIFT number. Your SWIFT number is the worldwide numeric address of your banking institution. This allows foreign banks to instruct each other on payments and accounts that they hold with each other and ensures money is accurately identified and sent to the right bank and branch.
The frustrating part for someone overseas can be trying to find out your home banks SWIFT number. If you are already overseas the easiest way is often to call the international number for telephone banking. If you really want to be prepared for your travels – take it with you!
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