7 Types Of Charges And Fees On Foreign Exchange Transactions

I love to explore foreign destinations and travel a lot outside the country. Exchanging currency is one of the main challenges of foreign travel. When travelling to a foreign country, we need to carry cash of the destination country. Converting currency is a foreign exchange transaction.

In order to ensure that I don’t lose money while converting currency, I prefer to use the currency converter like knighsbridgeFX.com. The currency calculator on their website shows the latest interbank rate for different currencies. Moreover, the exchange offers the best exchange rate and does not mark-up the rate with hidden fees and commissions.

I researched a bit more and found out that the following charges are generally included in the exchange rate by some banks, and foreign exchange brokers on different transactions involving foreign exchange.

Commission

Most exchanges and banks charge commission on every transaction. The commission is the fee for the services offered by the exchange. Some foreign exchanges clearly state commission as a percentage of the total currency converted, while others just include it in the exchange rate.

Spread

Spread is the difference between the buying rate and selling rate of a currency. Foreign exchange agencies and brokers make a profit due to the difference in the buying and selling prices. It is important to know the spread of the broker before exchanging money.

Dynamic conversion charges

When you visit a foreign country and offer to pay in your home currency, the local vendors may charge a DCC or dynamic conversion charges.

Cash Advance Fee

When you use credit cards to buy foreign currency, you will be charged a cash advance fee as you are borrowing cash from your credit card limit.

Transaction Fees

Transaction fees is charged when you use credit card to make payments in foreign currency.

ATM Charges

Certain banks charge withdrawal charges when you withdraw money from the ATMs of their partner banks in foreign countries.

Delivery Charges

When you use online currency converters to exchange money and opt for home delivery, some companies take delivery charges.

These are some of the charges you might incur when exchanging currency, withdrawing cash from ATMs or paying payments in foreign currency through debit or credit cards.

It is always advisable to choose a reputed foreign exchange like knightsbridgeFX.com to get the best exchange rates without any hidden commissions, fees and charges.

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