What is a currency exchange?
A currency exchange is a place where you can exchange one currency for another. For example, you could visit a currency exchange to exchange US dollars for Euros.
Why would I use a currency exchange?
When you’re traveling, you may be visiting a country whose local currency may be different from yours. Small merchants or local vendors may insist on cash payments and may not accept currencies of other countries.
Here’s where a currency exchange can provide a convenient way to convert your currency into the currency of the country you are in.
So, the currency exchange takes one currency, and gives me the exact same amount in another currency?
No. The amount you get in exchange depends on the current exchange rate between the two currencies. For instance, if you want to convert US Dollars into Japanese Yen, as per the current exchange rate, you would get approximately 105 Yen for each Dollar.
The currency exchange would also charge a fee to complete the transaction, which depends on the amount of money you exchange.
Is there any way to reduce the amount they charge as a fee?
Yes, there is. Often, the more money you exchange, the lower is the fee charged. So if you convert 10 dollars, vs. converting 100 dollars, you would end up paying more fees for that transaction. So if you plan to exchange $300, it’s best to do it all at once or at least in multiples of $100 to minimize the fee you pay.
Does a currency exchange accept every single currency in the world?
No. But most currency exchanges do accept common currencies, like the US dollar or Euro.
So if you’re from the Philippines and are traveling to Argentina, it’s best to exchange your Philippine Peso into a common currency, like the US dollar, before you go to Argentina. That way, you can be sure any currency exchange will accept your US Dollars to convert into Argentine Peso.
Where can I find a currency exchange?
Currency exchanges are commonly found at airports, as well as near major tourist attractions in most cities. Depending on the country, banks may also offer this service.
Podcast: What is a Currency Exchange
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about a currency exchange: What is a Currency Exchange, Why would you use a currency exchange, Does the currency exchange take one currency and give you the exact same amount in another currency, Is there any way to reduce the amount they charge as a fee, Does a currency exchange accept every single currency in the world, Where can you find a currency exchange, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-a-currency-exchange-a-super-simple-explanation/