In its online Travel Tips section, "USA Today" explains that knowing how to convert currency between countries is an important skill that can save you from making costly mistakes while travelling. Since the value of currency changes daily, being able to work out the exchange ratio yourself can keep you from getting less than you deserve when shopping, eating or staying in foreign countries. Currency conversion is figured out by multiplying the home currency by the exchange rate to find the value of foreign currency.
- Skill level:
Things you need
Find the current official exchange rate between the Great Britain pound sterling (GBP) and the U.S. dollar (USD). Exchange rates are printed in national newspapers or can be found at news outlets online, such as the BBC's official website.
Create a conversion formula of XY where X represents the amount of GBP you wish to convert and Y is the official GBP to USD exchange rate. For example, if you wish to convert 100 GBP and the exchange rate is 1.521, you would have 1001.521.
Decide how many GBP you wish to convert and multiply it by the exchange rate. In the example of 100 GBP and a 1.521 exchange rate, you would multiply 100 by 1.521.
The result is the equivalent amount of USD you would get. For 100 GBP multiplied by a 1.521 exchange rate, you would get 152.1 or £98.8. You now know the true USD value of your GBP.
Find a currency exchange location to make the actual monetary trade. Many places will exchange currency including banks, post offices, some hotels and special currency exchange stores. Most locations will charge a transaction fee or commission for exchanging your money to cover their potential loss should the exchange rate suddenly fluctuate. Look for a location that will give you the closest amount of USD to the true value you calculated.
Tips and warnings
- Generally, a flat transaction fee is cheaper than an inflated exchange rate when you are converting large amounts of currency. For smaller amounts, the inflated exchange rate might be a better deal.
- Some places will charge a flat transaction fee, while others add their commission by inflating the exchange rate. Do not trust that a rate posted in a non-government institution is the true exchange rate; it might be their own rate of exchange including their commission. Find the true rate of exchange in a newspaper so you can compare it to what you are offered.
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