Currency Conversion Guide for Backpackers in Australia
Knowing how to convert currencies will be a definite advantage to backpackers in Australia and all over the world. The maths is simple but very useful to anyone backpacking around Australia. It will help you work out the costs involved when it comes to budgeting your trip and understanding the value of money in a foreign country (if you're budgeting for your trip, see section Backpacker's Budget).
Foreign exchange rates
Foreign exchange rates are the comparative value of each nations currency which is based on the economical status at a specific time. As technical as this sounds, all it means is how much value one type of currency has compared to another (i.e, £GPB - $AUD, $USD - €EUR, etc...).
Exchange Rates System
The exchange rates change on a daily basis, so it's a good idea to check them occasionally to stay up to date with the current rates that affect you. Of course the rates changing over time is according to the economy but they can also differ greatly depending on the source.
For example, if a you wanted to buy some Australian dollars to take with you, you would have to find somewhere to purchase the money. There is no shortage of sources for you to choose from, foreign currency can be purchased on the internet, at the bank, in the travel agents, at the airports, in the post office etc...
So you could walk down your local high street, go into a bank and buy some Australian dollars only to visit the post office next door and find a much better rate. This is because companies who convert currency set the rates they offer to make a profit out of the exchange. So staying up to date with the rates different companies are offering (choosing to buy when your currency is 'strong') is a necessity to gain the best value for your money.
Another contributing factor can be a charge which is added on top for the 'service'. This means as well as profiting from the rates they provide, they can also have a 'standard fee' which they will charge if you use them.
Usually this kind of thing takes place in airports or by opportunists taking advantage of certain situations. Unfortunately the banks fall into this bracket and don't usually offer very decent rates. This also applies to electronic funds transfer and drawing money out on a credit/debit card from an A.T.M (you usually get charged a percentage around 3% per transaction) as they are out to profit any way they can.
It's worth remembering that drawing money from an A.T.M using your bank card from home can be very helpful in some situations. If your Australian bank card is lost or stolen for example it is a good idea to have access to money from your bank at home or via a money transfer from your Appointed Person
at home. You can learn about setting up a contingency fund incase of an emergency and lots of other helpful tips on how to protect yourself if things go wrong in the contingency funds
There are however companies who do change money without any excess fees. So research and compare all the options available and keep your eye on the rates.
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