I think most of the travelers know the process of exchanging some of home currency into a foreign currency when they travel oversea, and then reversing the process when they’re back. Money changer is the one that provides currency exchange service. And, they will earn a significant amount in each trade by taking advantage of currency spreads.
The service fees are often masked by the exchange rates applied to currency transactions. We as a consumer can do some advance planning to ensure that we receive the best possible rate and pay less service fees for our money exchanges.
I have exchanged my home currency MYR500 into foreign currency SGD207.45 with the exchange rate of 2.41 two days ago. During that period, the money changer buying rate was 2.37 and I made some analysis on their charges for each trade. Based on my observation, I just can tell that the actual cost might be 2.39 in order to match their earning profit. So, basically the charges will be:
This also means that their service charge is about 0.5-1%. Do you know why? Let’s take my example below: