The last thing you want is to end up paying a lot of money on conversion fees or exchanging currency from unlicensed money exchanges, which could lead to potential legal complications.
Here are 10 tips to help you get the most out of your currency exchange:
1. Exchange currency before flying abroad
The Indian rupee is not a global currency, i.e., it is not accepted abroad for exchange. You can convert it to a foreign currency safely and at a reasonable exchange rate only within India. So do the currency exchange before flying abroad.
2. Buy only from licensed money exchanges
Buy forex only from money exchange companies that possess RBI‘s Authorised Dealer-II or Fully Fledged Money Changer licence. Although unlicensed agents or stores may offer cheaper rates, there is a risk of getting counterfeit foreign currency notes from them. If law enforcement agencies catch you with counterfeit currency abroad, and that too without a valid bill of exchange, you will face grave legal consequences.
3. Research options online and choose the best deal
There are many websites that allow you to compare foreign currency exchange from RBI-licenced money exchanges nearby. You can compare the exchange rates and total cost of buying forex. Search online and find the best deal for you.
4. Buy foreign currency in various denominations
When buying foreign currency for your trip, request for it to be split into various denominations. Having a variety of denominations allows you to make purchases more easily and can help you avoid overpaying for small items due to a lack of change.
5. Know the required KYC documents
Every resident Indian needs to have KYC documents to purchase foreign currency in India as per RBI rules. Indian passport, valid visa (if applicable), confirmed air ticket (showing travel within 60 days), PAN card and a government-issued photo ID proof (Aadhaar, voter’s ID or driving licence) are required. For a hassle-free transaction, make sure to bring along these documents when exchanging currency.
6. If you are low on time, order foreign currency home
Get foreign currencies delivered to your home just like groceries or other shopping items through websites like ExTravelMoney.com, EbixCash, Thomascook, etc which offer same-day delivery. Opting for doorstep delivery can save you time and ease your travel preparations.
7. Avoid exchanging currency at the airport
Avoid exchanging currency at the airport as it may turn out to be a costly mistake. If you have ever bought coffee at the airport, you know how costly it is. The reason for this is that airports impose high rental fees on the shops operating within their premises. In turn, shops charge higher prices for their products in order to make up for the expensive rent. The same holds true for currency exchange outlets in airports. One may end up paying an extra 10-15% for currency exchange at such places. Meanwhile, online currency exchange websites generally charge a margin of only 1-2% for the transaction.
8. Don’t rely on currency exchange at your hotel abroad
We talked about how the Indian rupee is not a global currency and is rarely accepted for exchange abroad. However, some hotels abroad may accept the rupee but you should avoid it. Exchanging currency at such hotels may seem convenient, but they typically charge higher exchange rates and fees than banks or currency exchange offices. They also may have limited amounts of currency at their disposal, so you may not be able to exchange a large amount of money if needed.
9. Follow the 30/70 rule
Carry 30% of the required foreign currency as cash in multiple denominations and the remaining 70% in a forex travel card. It is a prepaid card that can hold multiple foreign currencies. Forex cards can be used abroad to withdraw cash at ATMs, pay at hotels and restaurants, make purchases at shops, and malls, and for online transactions, such as booking flights, hotels, and other travel-related services.
Carrying some cash is helpful in situations where card payments are not accepted. With a forex card carrying 70% of your travel money, security features like a chip and PIN ensure the safety of your funds. You can order a forex card online and they are usually more economical than purchasing foreign currency notes because their exchange rates are quite lower.
10. Keep your international debit/credit card as a backup
Here’s one last tip to keep in mind. Make sure to have your international debit/credit card as a backup option. This ensures that you’ll have access to funds in case your primary card is lost, stolen or declined. Also, many international debit or credit cards come with additional perks, such as access to airport lounges. These lounges can provide a comfortable and relaxing space to wait for your flight, with amenities like free Wi-Fi, snacks, drinks and even showers. However, before going on your trip, be sure to activate international spending on your card. This can be done either through your bank’s mobile app or by contacting customer care. Notify them of your travel plans and request that the card be enabled for international transactions.
The process of exchanging foreign currency in India can be daunting for someone without much experience. However, with the right resources and adequate knowledge, it is possible to successfully navigate this process with flying colours.
(The author of the article is George Zachariah, CEO at ExTravelMoney.com)