Many Americans have never had the opportunity before to buy foreign currency. There have traditionally been a lot of reasons for this, like not taking many foreign vacations, or only wanting to use dollars for investment and savings. However, many of these old rules are changing and more Americans are looking to buy foreign currency. Before just jumping in and signing up with the first exchange or broker you find in the phone book or online, learn some tips about how to buy foreign currency quickly and easily.
Know the exchange rates
This is a very important point when you buy foreign currency. You must know the current exchange rates. Most of the time you can find a neutral website (one that is not looking to actually facilitate your purchase of paper money) that will give regular updates on exchange rates. From here, your provider of choice can be compared to the actual rate. Obviously when you buy foreign currency there is no sense in overpaying, so stay as close to the neutral exchange rate as possible.
Watch the spread
Just like when buying or selling stock, there is a spread with currencies. When you buy foreign currency, you can expect to pay a higher price to obtain the money and then a lower price when you go to sell it back. This is normal and how the broker or dealer makes their money. For example, you might be quoted 1.39 and 1.30 for the price of Euros, in dollars. That simply means that you can buy foreign currency at 1.39 dollars for every Euro and sell each Euro for $1.30. The spread in this case is .09 Euros. The dealer makes a profit of 9 Euros for every 100 that they exchange back and forth, or 9 percent.
Buy foreign currency online
In many cases, your supplier will allow you to buy foreign currency directly online (as well as in person). While this can be an incredibly convenient service, you still need to watch out for some things. You should never pay any additional fee to buy online. Also, make sure that the company has a strong reputation for successful dealings with their customers. This is what makes the Xchange of America a great place to buy foreign currency online; they meet all the requirements and always provide you with great value at the lowest possible prices. Contact XChange of America today for more information on how you can save money on your next currency purchase.