When you are traveling abroad, the act of changing currency can quickly drain your budget if you're not careful. Keep track of what it costs to convert your English pounds to U.S. dollars to find the best deal on your money. Ask for full disclosure of any hidden fees or transaction costs that are applied on top of the conversion rate.
Do the Math
To obtain the exchange rate, divide the amount in U.S. dollars that you received for English pounds. For example, if you handed over 200 English pounds and received 310 U.S. dollars, divide 310 by 200. The result is 1.55. The exchange rate therefore is 1 English pound = 1.55 U.S. dollars. Alternatively, you can divide English pounds by U.S. dollars. In the example, this would be 200 divided by 310. The result is 0.645, so the exchange would be approximately 1 U.S. dollar = 0.65 English pounds.
Read the Receipt
If you change money at a currency exchange counter or your bank, read the receipt. Although the currency exchange business will have rates posted outside, the true cost of getting cash may include additional fees. Similarly, your bank may charge a fee for distributing foreign currency or charge you a less favorable exchange rate than you might receive elsewhere. To find out the true cost of the transaction, divide the amount of pounds you exchanged by the actual amount of U.S. currency you received. This will take into account all hidden fees in the transaction.
Review the Transactions
Purchases on your credit card will be applied in your home currency. Most credit card companies will disclose on your statement the amount applied in U.S. dollars and the resulting debit in English pounds. To keep accurate records, retain all purchase receipts and compare the amount you were charged in U.S. dollars to the amount in English pounds you were debited. Dividing the purchase amount by the debit amount will give you the exchange rate. Similarly, keep track of ATM cash withdrawals while traveling. Review your bank account and reconcile it against your withdrawal receipts. Many banks charge a lump-sum fee for each withdrawal in a foreign currency. To calculate the true cost of exchanging the money, divide the cash withdrawal amount by the amount your account was debited, including the transaction fee.
Keep it Cheap
The Independent Traveler website recommends using credit cards and ATMs to get the best deal on currency exchange. The site also recommends cashing traveler's checks in the destination country when traveling abroad. If you are using traveler's checks in English pounds and are traveling to the U.S., for example, it is best to exchange them in the U.S. Use reputable places such as banks to exchange your money.
Catherine Lovering has written about business, tax, careers and pets since 2006. Lovering holds a B.A. (political science), LL.B. (law) and LL.L. (civil law).