Many people ask, “Is it better to exchange currency at the airport or bank?” While this may be a popular question, I’ll do my best to explain why exchanging currencies at the airport or bank is often the safest way to conduct business. Here’s why.
The second you go into the airport, the next thing you need to do is turn on your laptop and enter the exchange rates. If you were to exchange currency at a bank or ATMs, you could lose money because the banks will generally have higher risk levels.
Since the exchange rates fluctuate constantly, you can’t be sure of their authenticity. In the past, it was common for currency markets to change overnight. What this means is that if a bank has a high-risk market, it could bring in large amounts of capital.
These banks are therefore forced to increase their exchange rates to earn their profit. They must protect their profits, so they must pass on the cost of the higher exchange rates to the consumer. This causes high prices on the retail side of the business.
Another drawback to banking the exchange rates is that you have no access to the pricing data in real time. The banks will only release accurate information when the information has been validated through other sources. Unfortunately, there is no way to verify what you will pay at the time of purchase.
Also, banks have very strict protocols about who is allowed to view the exchange rates at the end of the day. If someone wanted to manipulate the exchange rates, they would be quickly found out by the bank.
With an ATM, the exchange rates are instantaneous, but they also use many of the same problems of banking the rates. Banks tend to use the current state of the economy to decide which side of the market to take.
When the economy slows down, the banks usually pass on the increased costs of doing business to the customer. When the economy goes up, they go up on the expenses.
Because of this, many businesses are also aware of how volatile international trade is. They can anticipate the increases and decreases in prices ahead of time, which enables them to price their products accordingly.
Furthermore, I’m not suggesting that it’s best to exchange currency at the airport or bank. There are some legitimate reasons to exchange at the airport or bank, but you must be careful with what you choose.
One reason you might choose to exchange at the airport is if you’re traveling with small children. If you keep your cash in a separate safe from your children’s, they will have no access to the funds in the event of a money loss.
Finally, the best reason to exchange currency at the airport or bank is if you want to save money on the exchange rates. Just make sure you understand the risks before you enter the bank.