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Many of us living in Singapore use foreign currencies regularly, whether for international travel or making overseas online purchases.
Traditionally, to obtain foreign currencies, many would simply head to the money changer to convert their Singapore Dollar (SGD) for the foreign currencies they needed. Some may even hunt around to find money changers that offer them the most competitive exchange rates. This takes time and also requires handling large sums of physical cash notes. Moreover, the effort may not be worth it, as we may not end up with the best rates.
If you want to get the best exchange rate and save on FX fees for your travel and online spending, here are 4 hacks you need to know and practice.
#1 Toggle Between The Options To Pay In Foreign Currencies
When we engage in online shopping on an overseas website, the cookies on our laptop may signal to the site that we are based in Singapore. Quite often, the settings will be configured for Singaporean visitors. This means that the prices of the products we buy will automatically be quoted in SGD.
However, some sites may also offer the option for us to choose a different location. By doing so, the prices of the items will be quoted in the currency of the country we select. Sometimes, this can result in substantial savings.
For example, when we tried shopping on ASOS, a British online fashion and cosmetic retailer, there was an option that allowed us to change our preference to shop in the “United Kingdom” instead of the default option, which is “Singapore.”
Once we select that, the prices of products will be quoted to us in the Pound Sterling (GBP) instead of the SGD.
If we are familiar with the current foreign exchange rate between GBP and SGD, we would quickly realise that there is a price discrepancy.
On the day of writing, the GBP/SGD was trading at GBP 1 = 1.69 SGD.
However, on the site, prices quoted in SGD were more than 1.69 times the price that was quoted in GBP. In other words, we pay less when we choose to pay in GBP.
For example, if we wanted to buy a pair of Dr Martens boots and a polish cream, it would cost us SGD 437.98.
However, when quoted in GBP, the same items would only cost us GBP 194, or about SGD 327.86 (based on the GBP 1 = 1.69 SGD).
Whenever possible, we can toggle between the different foreign currencies to check which gives us the best price.
A simple strategy is to choose the currency of the country from which the website is from. If you are shopping on a UK-based site, choose the GBP. If you are shopping on a Japanese site, choose to pay in Japanese Yen. Of course, check to make sure you are getting a better price.
#2 Avoid Paying FX Fees When Transacting In Foreign Currencies
Paying a lower price in foreign currencies does not necessarily equate to getting a good deal. When engaging in online foreign currency transactions, it’s likely that we’ll be using our SGD-issued credit cards, which could lead to incurring an FX fee. Furthermore, the foreign currencies involved in these transactions must be converted into SGD, and there’s no guarantee of receiving a favourable exchange rate.
For instance, if we make the ASOS purchase highlighted above for GBP 194 with our regular credit card, we may get an exchange rate of 1.72. This means we will pay SGD 333.68. In addition, we may also be charged an overseas FX fee of 3% on the converted SGD. In total, we will pay SGD 343.69, or about SGD 15.83 more than what we initially thought we would be paying.
One effective method to reduce the impact of the FX fee is to make direct payments in GBP from a savings account designed for holding foreign currencies.
Take for example, if we have an OCBC Global Savings Account, we would be able to store up to 10 major currencies in one account, including the AUD, CAD, CNH*, CHF, EUR, GBP, NZD, USD, JPY and HKD.
Utilising the OCBC FX (Foreign Currency Exchange) on the OCBC Digital app, we can convert our SGD to GBP and link the Global Savings Account to any OCBC debit card to pay for the purchase directly in GBP. This approach allows us to bypass any FX fee associated with foreign currency transactions.
#3 Steer Clear Of Currency Exchange On Weekends
The foreign exchange market operates 24 hours a day during weekdays but is generally closed on weekends. As a result, trading volume is significantly lower during weekends, leading to wider spreads between buying and selling prices. The end result is that you will simply get a less competitive exchange rate to compensate for the lack of liquidity.
To enjoy more competitive rates, it’s generally advisable to exchange foreign currencies on weekdays. For some, this could mean taking time off our lunch break to visit the money changer.
For a more convenient solution, we can use the OCBC FX that is available on the OCBC Digital app, enabling us to enjoy instant currency conversion at competitive rates anytime and anywhere in the world, without the need to physically visit a money changer. The foreign currencies that we exchange will be kept in our OCBC Global Savings Account. We can then make payments for our foreign currency purchases using our OCBC debit card linked to the account. This way, we will never miss out on the good deals on weekends!
#4 Secure Favourable Foreign Exchange Rates In Advance
When it comes to obtaining a favourable exchange rate, the timing of our currency conversion can be more critical than the place where we exchange our foreign currencies. Currencies often exhibit lower volatility on a daily basis. Even if we manage to locate the most competitive rates available, it’s unlikely that we’ll be able to secure rates better than those readily accessible through a quick Google search.
For example, if we need Japanese Yen (JPY) today, the current rate that we see online for the SGD/JPY is currently 108.41 (as of 12 December 2023). It’s unlikely that we will be able to find a rate that is higher than 108.41, even if we go to the most competitive money changer.
However, if we had an upcoming trip to Japan in December and were proactive about securing a favourable exchange rate, we might have taken advantage of the opportunity to lock in rates earlier, say a month ago. At that time, the exchange rate for SGD/JPY was 111.59. During this period, it would have been relatively easy to find exchange rates that would give you 110 or more Japanese Yen (JPY) for every Singapore Dollar (SGD) exchanged.
Utilising the OCBC FX on the OCBC Digital app, we can receive real-time Rate Alerts on our preferred currency when it hits a predetermined exchange rate. For added convenience, we also have the option to automatically exchange our currency when it hits the levels we’ve set.
Locking in foreign currency rates in advance provides us with the assurance that we will secure the rates we desire, rather than having to accept the prevailing foreign currency spot rate at the time of our purchase.
Enjoy Convenience & Benefits With An OCBC Global Savings Account
Besides getting us the best and most competitive rates, the OCBC Global Savings Account also serves as an account that assists us in saving, spending, and accumulating various major foreign currencies in a cost-efficient manner.
When we save and accumulate through the OCBC Global Savings Account, we can also earn interest on selected foreign currency holdings. Additionally, when it comes to spending our foreign currencies, we incur no admin fee when converting currencies or using our OCBC debit card.
Furthermore, if we do need cash while overseas, we can withdraw cash for free from any OCBC ATM abroad, as long as it’s in the country where the currency is denominated.
Read Also: How To Use OCBC 360 As Your Forced Savings Plan To Reach Your Savings Goals More Quickly
Important Information
*Chinese Yuan Offshore (CNH) is not available for online shopping or cash withdrawal transactions.
1. Foreign currency investments or deposits are subject to inherent exchange rate fluctuation that may provide opportunities and risks. Consequently, exchange rate fluctuations may affect the value of your foreign currency investments or deposits.
2. Earning on foreign currency investments or deposits may change depending on the exchange rates prevalent at the time of their maturity if you choose to convert.
3. Exchange controls may apply to certain foreign currencies from time to time.
4. Any pre-termination costs will be taken and deducted from your deposit directly and without notice.
5. This is for general information and does not take into account your particular investment aims, financial situation or needs. You should seek advice from a financial adviser before committing to a purchase. Otherwise, you should consider the suitability of the product.
6. We are not making an offer, solicit to buy or sell or subscribe for any security or financial instrument, enter into any transaction or participate in any trading or investment strategy with you through this document. Nothing in this document shall be deemed as an offer or solicitation to buy or sell or subscribe for any security or financial instrument or to enter into any transaction or to participate in any particular trading or investment strategy.
7. OCBC Bank, its related companies, and their respective directors and/or employees (collectively “Related Persons”) may, or might have in the future, interests in the products or the issuers mentioned herein. Such interests include effecting transactions in such products, and providing broking, investment banking and other financial services to such issuers. OCBC Bank and its Related Persons may also be related to, and receive fees from, providers of such products.
8. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.
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