Practical Foreign Exchange Tips

  • July 19, 2015
  • Kate Sheehan

Foreign Exchange that puts more money in your pocket!

When you travel overseas, you probably notice that when you exchange your A$ into American Dollars or Pounds Sterling, some of it appears to “go missing” and you are vaguely aware you are being charged for the transaction.

Banks refer to the charge rather euphemistically as “commission”. We usually just hand over our cash without questioning. We meekly accept that our currency converter was way out and that the actual exchange rate you hear on the news, bears little resemblance to what the bank is quoting.

Spot Rate

Not long ago, I was organising an overseas conference and wanted to carry out a telegraphic transfer in order to pay for the hotel. Before calling my bank, I looked up the foreign exchange ‘spot rate’ for Australian Dollar to US dollar and it was .7481. Therefore, I was expecting to buy $13,000 worth of US dollars for around A$17,377.

Retail Rate

However, the bank was quoting what is known as their ‘retail rate’, which happened to be .7100. This would make it more expensive for me to buy US$. At this rate is would cost me A$18,309.


As I had made a point of looking up the ‘spot rate’, I let the bank know in know I wasn’t very happy with their margin and asked for the ‘dealer rate’ which was .7383. This resulted in my transfer costing only A$17,608 … a saving to me of A$701.

The exact numbers are not important, but this experience was a timely reminder that my knowledge of foreign exchange along with my tenacity to apply financial literacy, put several hundred dollars back into my pocket!  That’s more money to spend on the trip or more money to save and invest.  Either way, it was worth the effort to be financially aware and ask for a better deal.


Leave a Comment

Your email address will not be published. All fields are required.