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Trip Tip: Currency Exchange – Don’t leave money on the table!

Currency Exchange

Traveling across international borders generally means that you will need to get some local cash. While a checking account that reimburses fees for ATM withdrawals (i.e. Schwab Bank) and credit cards that do not charge foreign transaction fees (i.e. Capital One) are great, we like to have some pocket-money before we leave so that we can hit the road running. It lets us get out of the airport or across the border quickly and avoid some of the scams so prevalent at many entry points.

Take the time to research the spot price (current market price for a currency pair) and look for tight spreads between the buy rate and the sell rate. Remember, you are BUYING money. The bank’s advertising may say that it is commission free but, depending on the spread and the variance from the spot rate, you may be paying dearly. Try to take out only what you need so that you do not incur costs when you have to sell back your remaining currency at a loss after your trip. Great deals are out there once you understand the process.

Recently, we were preparing for a trip to Hong Kong and wanted to buy 7000 Hong Kong Dollars with Thai Baht. Our favorite site to start our research is On their website, we found that the current spot rate was 1 Hong Kong Dollar (HKD) = 4.18 Thai Baht (THB). Armed with this information, we started to research our options. (Note: If you will be making your purchase in the country you are visiting, the spot price will be the inverse, using their currency as the base. In this case the current spot price is 1 THB = .24 HKD.)

Initially, we do an internet search to see if there are recommended low-cost providers. As we had found previously, there is a great exchange (Siam Exchange) in downtown Bangkok that we use when we are in the area that is very near the spot price and has extraordinarily tight spreads. Tight enough that round-tripping (overbuying currency and exchanging the leftovers when you return) costs very little. Before one of us hops in a taxi and spends hours in Bangkok traffic, we need to factor in the taxi cost and the value of our time. If the amount of currency needed is large enough, it may be worthwhile – do the math.

Since we were returning a rental car to Suvarnabhumi Airport, we decided to see how their exchanges compared since it would cost us nothing extra in transportation or time costs.

We calculate the cost of the currency purchase with the following equation:

(Sell Rate – Spot Rate) X Currency Total = Cost

All of the exchanges in the Suvarnabhumi Airport Terminal have the same prices. The buy/sell rate was 3.89/4.36. Note that the buy/sell rate the exchange lists is from their point of view. They are telling you at what price they will buy and sell a particular currency. In this instance they will buy your HKD for 3.89 THB, and they will sell you HKD for 4.36 THB. That is a huge spread! If you look at the difference in the sell rate versus the spot rate you will find that it is .18, which is their markup. In this case you will pay 1260 THB (38.76 USD – based on the current spot price of 1 USD/32.51 THB) over the spot price. Expensive!

(4.36 – 4.18) X 7000= 1260 THB

Luckily, we had done our homework. Hidden down in the basement near the Airport Rail Link is a branch of Super Rich. They have more competitive rates than the bank locations in the airport terminal. How competitive? Their spread for the day was 4.15/4.19. That means that the difference in sell rate versus spot rate is 70 THB (2.15 USD). By riding the escalator down 3 levels we saved 36.60 USD on the spot price alone. This is real money savings!

Currency Exchange

Once you know the real cost of buying money it takes very little time to use those skills to stretch your vacation budget.


Warning! Only read further if you are a numbers nut! You already know enough to save big money:

  1. Know the current spot price and get as close to that price as possible.
  2. Look for tight spreads between the buy/sell rate.

We had a great time in Hong Kong and came in under budget. We found that the hiking was spectacular and opted to skip some shows and instead wear ourselves out in the great outdoors. This resulted in us ending our trip with 1610 HKD leftover. When we returned to Bangkok we used our leftover HKD to re-buy Thai Baht. This hurts since it was an unnecessary expense, what I refer to as “round-tripping”.

(Original Sell Rate – Buy Rate) X Leftover Currency Total = Round-trip Cost

How much did we lose? While we were away the buy/sell rate at Super Rich moved against us to 4.13/4.17. We received 4.13 THB for each 1 HKD.

(4.19 – 4.13) X 1610= 96.60 THB

Since we had bought the HKD at 4.19 THB each and were now using it to buy 4.13 THB for each HKD, we were losing .06 THB per HKD. That equates to a total cost of 96.60 THB. Holding the USD constant from our original purchase date at 1 USD/32.51 THB, our round trip cost was 2.97 USD.

Currency Exchange

To find the total currency purchase cost for the trip to Hong Kong we must adjust the original cost basis for the round-trip currency.

(Original Spot Rate – Original Sell Rate) X Currency Remaining = Adjustment

(4.18 – 4.19) X 1610= -16.10 THB

Next we add it to the original calculated cost plus the round-trip cost.

Original Cost Calculation + Round-trip Cost + Adjustment = Total Currency Cost

70 THB + 96.60 THB – 16.10 THB= 150.50 THB

We run the numbers and we find that the total currency cost for the trip was only 150.50 THB (4.63 USD)! Not too bad, even with the overbuying of HKD. When you run the numbers based on the bank exchanges located in the terminal you will find that the same transaction would have cost 1501.50 THB (46.19 USD) using their rates (start of trip 3.89/4.36, end of trip 4.03/4.34). It pays to shop around and to use a calculator. Even better set up your own Excel spreadsheet!

Currency Exchange