Everyone wants the best deals when they are travelling overseas, from airline tickets to accommodation — nobody wants to lose out on any opportunities to save.

But one tricky bit that many travellers have not quite mastered yet, is working out the best way for exchanging foreign currency. It may seem like a small part of your travel plans, but you’ll be surprised at how you can make incremental savings with the right currency exchange method for your trip.

There are four main ways to obtain foreign currency, and each has its pros and cons. Here’s what you need to know to pick the most suitable option for your trip.

1. Money Changers

Do we still need cash in this digital age? Experienced travellers will know the importance of having cash in hand for visas on arrival, additional airport taxes, or when you’re shopping at a street market. Authorised money changers are your best bet as they often offer the most attractive exchange rates.

The Pros: This is the most straightforward option. There are just two main terms to note: “Sell rate”, when changing Singapore dollars (SGD) to foreign currencies or the selling price of the foreign currency; and “buy rate”, when changing foreign currency back to SGD, or the price if a money changer is to buy the currency from you.

Money changers generally offer the best exchange rates and you don’t have to worry about any service fees. There are a few “hotspots” well-known for their good rates, like The Arcade at Raffles Place, People’s Park Complex, and Mustafa Centre.

The Cons: As some money changers offer better rates than others, finding the best rate can be a time- and energy-consuming process. There is also the security issue of carrying around large amounts of cash.

Rates generally differ marginally. Unless you’re changing thousands of dollars, your savings could be the same price as the cab ride you took to get that good rate.

Money changers in the public and transit areas of Changi’s terminals are a convenient way to exchange for foreign currency before departing Singapore.

Pro-Tips:

·       Monitor average currency exchange rates with mobile applications or websites like CashChanger, Get4x or XE.com. Do take note that money changers will not necessarily carry these exact rates, but some are open to bargaining.

·       Always count your cash and confirm the correct currency before leaving the money changer. This will help avoid any misunderstanding that may spoil your travelling mood!

2. Overseas ATMs

Withdrawing foreign currency through ATMs is a relatively fuss-free method, as long as your debit/credit card is linked to one of the three major networks: PLUS (Visa), Cirrus or Maestro network (Mastercard).

ATMs marked with either Visa or Mastercard logos usually allow cash withdrawals. Always check with your bank on your card’s terms and conditions of overseas use before skipping town.

The Pros: Some banks offer “free transaction” debit cards, or don’t charge customers transaction fees if specific ATMs are used. ATMs are usually placed in high foot-traffic areas and tourist spots, and therefore easily accessible. Where possible, avoid using ATMs in remote areas where personal safety could be an issue.

The Cons: It is common for users to pay a flat fee, between S$1-S$6 for each transaction, or a set percentage, from one to three per cent, of your withdrawal amount. Before leaving for your trip, always find out the exact details from your bank, or you may incur some surprise fees along the way.

Avoid carrying large amounts of cash with you and withdraw only what is needed. This means you may spend more on multiple transaction fees, but safety first – always. As an extra precaution, before leaving for your holiday, call your bank to set a withdrawal limit in case your card is stolen or misplaced.

Pro-Tips:

·       Before you leave for your trip, you might want to take note of the ATMs located around your accommodation.

·       Remember to notify your bank and activate your card for overseas use to prevent the bank from freezing your account by mistake due to foreign withdrawals.

3. Multi-Currency Accounts

According to the World Payment Report, there is a steady upward trend in travelling cashless. It is easier to manage and lowers the possibility of misplacing money. One alternative to using credit cards is to use a Multi-Currency Account (MCA), which functions like a portable money changer and all-in-one wallet.

The Pros: MCAs allows you to monitor changing rates and buy currency when the exchange rates are favourable. So, keep a watchful eye on the rates.

Deposits and foreign currency received would be stored in the account directly so you can avoid being stuck with loose change. Moreover, compared to using a credit card, you don’t have to pay extra costs for foreign exchange conversions.

The Cons: Before enjoying the benefits of an MCA, you need to open a separate bank account – which must contain a minimum balance (typically between $1,000 to S$3,000). So, instead of being able to access that money, it sits in the account untouched.

Some banks have limited foreign currency options which may not be suitable for your trip. Refer to the list below for MCAs available and the foreign currencies they support.

Using MCAs, like most cashless options, would mean relying on merchants accepting card payments. While this is becoming less of an issue over time, it means you’ll still need to keep some cash on you just in case.

Multi-Currency Accounts to consider:

1)     DBS Multi-Currency Account offers 12 currencies: AUD, EUR, CAD, HKD and more.

2)     OCBC Global Savings Account offers 8 currencies: USD, NZD, AUD, CNH and more.

3)     UOB MightyFX offers 10 currencies: USD, AUD, NZD, CNH and more.

Remember to check with your bank for specific transaction fees and interest rates.

4. Digital Travel Wallets

We don’t mean actual wallets – digital wallets are another cashless method available to travellers. Singapore’s first multi-currency wallet, called YouTrip, is a combined creation of Mastercard, EZ-Link and You Technologies Group. When you download the mobile application and sign up online, you get a physical YouTrip card that you can use for cashless and online purchases.

The Pros: Users can make overseas payment in 150 foreign currencies with no overseas transaction fees. There is a 24/7 in-app money changer – to lock-down competitive rates before the trip.

Safety precautions are also implemented, allowing you to deactivate the card immediately when lost or stolen. The mobile application even shows your transaction history to better maintain set budgets.

The card is also an EZ-Link card that can be activated for public transport in Singapore, as well as destinations like London, Hong Kong and Sydney.

The Cons: You can only lock-down 10 (SGD, USD, EUR, GBP) out of the 150 currencies offered which can be slightly limiting to a user.

Overseas ATM withdrawals are available, but the fee is set at a pricey S$5 per transaction. Also, if there’s inactivity for 12 months, you will incur a S$5 fee. To avoid paying this fee, try doing some online shopping or take public transport with your YouTrip card.

Pro-Tips:

·       Before determining whether to go cashless while abroad, always research a country’s spending behaviour. Countries like Japan, Argentina, and Mexico typically favour cash-only transactions, while destinations like Sweden, China, and the UK are more likely to accept cashless payment options.

 

We rated each of the four currency exchange options based on convenience, savings, and security and added a quick summary of the pros and cons to help you make the best choice:

Table of Comparison

	Money Changers	ATM Withdrawals	Multi-Currency Accounts (MCAs)	Travel Wallets
Convenience	4.5/5	4/5	3/5	4.5/5
	There are many money changers located in Singapore The process of exchanging currency is simple	Most cards are compatible with international ATMs ATMs are in high foot-traffic areas and tourist locations	It is necessary to open a separate bank account and it must contain a minimum account balance Limited foreign currency options	The process of signing up and acquiring a YouTrip card is simple Also acts as an EZ-Link card Some merchants will not accept cashless payment
Savings	4/5	3.5/5	4.5/5	4.5/5
	Offer competitive rates compared to banks Vary slightly from one another	Transaction fee of S$1-S$6 per transaction, or one to three per cent, of the withdrawal amount	Easier to keep an eye on the exchange rate fluctuations – and buy it at a favourable rate Don’t have to pay for foreign exchange conversions	Able to lock-down favourable exchange rates No transaction fees Overseas ATM withdrawals and inactivity has a fee of S$5
Security	3/5	4/5	4/5	4/5
	Carrying large amount of money to and from money changers may be risky	Many ATMs located in public areas with high volume of people or inside banks Ability to set withdrawal limit for safety	Ensures you avoid carrying bulky cash when you travel If your debit card is linked to your MCA, you’re able to block your card if it is lost or stolen	You can temporarily lock your card through the mobile application instead of calling the helpdesk Mobile application allows you to monitor card transactions

Do you know how your credit card works overseas?

When using credit cards overseas, you may have noticed that merchants give you the choice of paying in your “home” currency or the “local” one. If you’re using a Singapore credit card, the “home” currency for you would be SGD. The “local” currency would be the currency used in the country you’re visiting. This is known as Dynamic Currency Conversion (DCC).

What will using DCC cost you?

At first glance, it looks like you’re locking in a specific exchange rate, and so there are no surprises when you receive your credit card statement.

However, it’s pertinent to note that the exchange rate at the time is determined by a DCC service provider – not the bank. There isn’t an exact mark-up of the exchange rate, but generally it sits at three per cent. On top of that, your card-issuing bank may also charge a fee for overseas transactions (some banks do offer waivers though).

 

All things considered, each of the methods — Money changers, ATM withdrawals, MCAs or travel wallets — come with their own pros and cons.  So, besides considering the option that’ll give you unbeatable savings, choose a fuss-free option that will help you relax and enjoy your well-deserved holiday, too!