While international travel may be the last thing on your mind in the current socio-economic climate, this is likely to change considerably as global economies and borders continue to reopen.
In this instance, you may be considering booking a long-awaited trip abroad, while preparing for this by ensuring that you have the right clothing to pack and the request currency to spend in.
Of course, most popular tourist destinations offer travellers the choice to spend in either the local currency or globally acceptable alternatives such as the USD and the GBP. But which is the best option when travelling internationally?
The Advantages of Using the Local Currency
In simple terms, it’s typically far more beneficial to spend in the local currency. The main reason for this is that this enables you to target an optimal exchange rate, creating a scenario where you achieve the best possible value for your money and increase your potential spend.
The opposite is often the case when you pay directly using an international currency, as this will expose you to a real-time (and potentially mediocre) exchange rate.
As any currency trader will testify, exchange rates are variable and can fluctuate wildly within an incredibly short period of time, so not using overseas currency can increase your total spend considerably.
At the same time, institutions and banks will also apply a percentage or commission fee to each transaction, with this often fixed at between 3 and 3.5%. This is underpinned by a third-party service provided by Dynamic Currency Conversion, which acts as a go-between for merchants and consumers and charges a premium to convert currencies.
Are There any Benefits to Spending in Your Home Currency?
However, there are some benefits to spending in an international currency, not least the fact that this is genuinely convenient and negates the need to exchange funds directly.
In the case of major currencies such as the USD, you may also find that this benefits from the best exchange rates and is paired with various local currencies at some locations.
This reflects the USD’s status as the world’s primary currency reserve, with the Euro considered to be the second most commonly held reserve across the globe. By Q4 2019, it was estimated that more than $6.7 trillion in reserves were held throughout the world, so it stands to reason that this should remain widely used on an international basis.
How to Make the Right Choice as a Traveller
To ensure that you make an informed decision, your first step should be to check and monitor the relevant exchange between the local currency and your domestic alternative.
If you have some experience of forex trading, you can also use an online platform to analyse the latest trends impacting on real-time exchange rates, helping you to act decisively and time your exchange perfectly.
The next step is to check out your location to see which international currencies they accept, and whether any of these are paired with the local currency.
You can then consider a myriad of factors before making your final choice and hopefully getting the best possible value for your spend!