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Foreign exchange tips to save your money

Little charges, like cash withdrawals and transaction fees, can really add up when you're spending money abroad.

Save some cash by keeping these 8 foreign exchange tips in mind.

1. Consider opening an international account

Opening an international bank account can be a really useful way to manage your money when you're abroad. This can also save you a lot of money in ATM and transfer fees. With an HSBC overseas account, you can open an account before you land in over 30 destinations worldwide, including Sri Lanka.

You don't need to visit a branch to open an HSBC overseas account. Also, if you're an HSBC Premier customer in Sri Lanka, then you're already eligible for Premier in another country/region. Arrange a callback

2. Stay in your banking network

When using an ATM overseas to take out money, make sure it's one that's in your bank's network. Otherwise, you could be charged a much higher transaction fee. 

With your HSBC Premier Debit Card, you get free cash withdrawals from any ATM in Sri Lanka and from all HSBC ATMs worldwide. HSBC Advance customers can also withdraw cash free of charge from any ATM in Sri Lanka.

3. Pay in local currency if you have the option

Whether you're using an ATM card or a credit card, always choose the foreign currency if you're given the option. The merchant's bank or credit card device usually has a much wider foreign exchange (FX) spread compared to making the exchange through your own credit card.

A dynamic currency conversion (DCC) will be applied to your transaction if you choose to pay in your own currency. You'll be paying a premium with the markups and other transaction fees for FX transactions.

4. A credit card might not be the best option

Credit cards offer some convenience when you travel, especially for settling large bills like tickets or accommodation. 

Unless it's an emergency, avoid taking out cash advances on your credit card. You'll be charged the daily interest rate as well as a percentage of the transaction value. For HSBC Sri Lanka credit cards this is 5% or a minimum charge of Rs.550, whichever is greater.

5. Avoid exchanging currency over the weekends

Try to avoid the weekends because most markets around the world are closed. You'll get the best rates when you exchange foreign currency during bank hours. Why will you pay more? Since banks don't know what the new rate will be on Monday morning, they charge a slightly higher rate to protect themselves against currency fluctuations when the market re-opens.

For more information about holding foreign exchange in Sri Lanka, see the Department of Foreign Exchange of the Central Bank of Sri Lanka. 

6. Check for any hidden fees

Many currency exchange shops will give you a great rate on the board but they may not include all the details. Ask whether they charge commission or transaction fees. That good rate might only apply to notes of a certain denomination or year. If they ask you to convert a certain amount to get that rate, this could be their way of adding fees to your exchange. 

7. Choose a larger exchange shop (but not at the airport)

Smaller shops will often have fewer notes in stock, so you'll be charged a premium for exchanging your money. Choosing a reputable brand for your foreign exchange needs will also give you the security that you won't get short changed or cheated with fake notes.

Don't be tempted to change your money at the airport, either. These currency exchange shops can add large markups, meaning you'll get less for your money. You have up to 90 days to convert any foreign currency brought back into Sri Lanka to rupees or credited into a foreign currency account.

8. Get preferential rates through your bank

Ask your bank if any of their accounts come with better rates. For example, we offer HSBC Premier customers preferential foreign exchange rates on over-the-counter FX transactions. 

See the most recent HSBC foreign exchange rates here.

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