A Better Way To Manage Currency Conversions

If your life operates in multiple currencies — e.g., you’re a retired US citizen living abroad, you’re a foreign national living in the US, you work in the US and send remittances elsewhere, you live or travel in multiple countries, etc. — you know that managing different currencies can be hassle-prone and expensive.

To convert from one currency to another, you typically pay a fee as well as a “bid-ask” spread. You may have walked by the currency exchange booths in airport terminals and noticed the difference between the price at which they buy and sell currencies — besides being confusing, it’s a hefty mark-up. Many credit and debit cards also charge fees that can amount to a few percent that is tacked onto every purchase. And, you may return from a trip with a few coins and bills in your possession that you don’t know what to do with.

New financial firms are innovating to make this problem easier and cheaper for consumers and the two most well-known are Wise and Revolut. If you’re reading this from outside the US, there’s a good chance you’re familiar with one or both of them; if you’re in the US and don’t get out much, you probably never heard of either of them and may have already stopped reading this note.

If you regularly cross borders and/or transact in multiple currencies, you should give both of these financial services a close look. I’m not going to offer a full review of either, nor do a comparison of their respective plusses and minuses but instead I’ll describe how both work at a high level. If you want to learn more, the google tubes are full of information about them.

The key things to know about both Wise and Revolut are that they:

• act a lot like a bank but neither is legally licensed as one so don’t leave all your life savings in either of them
• allow you to electronically send money to and from your account, as if it were a bank
• exchange from one currency to another at a low cost
• provide a debit card that allows you to make purchases in the local currency, even if your account is in a different one
• operate on a phone app and offer similar security that you’d expect with any other financial application
• have a global orientation — they speak multiple languages, operate in most countries, and can exchange many currencies across the globe

If you regularly transact in multiple currencies, Wise or Revolut may be a better solution for you than using a traditional credit or debit card, wiring money from your bank or the local Western Union, or buying cash at that overpriced airport kiosk.