Using money abroad and foreign exchange calculations Topic 8 Using money abroad and foreign exchange calculations

Learning Intentions By the end of this topic you should be able to: Explain what a ‘Currency’ is Explain what foreign exchange is Define and explain ‘variable exchange rates’ and ‘commission’. Know where to exchange currency Use terminology relating to currency exchange Explain how to use cards abroad

Using Money Abroad – Foreign Money Calculations Currency is the unit of money used in different countries. Each country’s currency has a different name, symbol and value. The Euro is the legal tender currency used by 18 of the 28 countries in the European Union – collectively known as the eurozone It is also used in 4 micro states – Andorra, Monaco, San Marino, The Vatican City.

The Dollar and the Pound Sterling The currency in the USA is the US Dollar (USD). A lot of other countries use the name dollar for their currencies. The Pound Sterling is the official name for the British Pound, which is the currency of the UK, Jersey, Guernsey and the Isle of Man. Some other countries also the name Pound for their currency ie Egypt and Lebanon.

Activity 8a Use the internet to find the Currency of the different countries. Complete the table. Find out how much of each currency you would get for £10. Use www.xe.com

Exchanging money When visiting a different country you will have to obtain currency of that country to pay for things. This means you will have to exchange sterling for another currency. The ‘Exchange Rate’ is the price for buying or selling different currencies. These rates change all the time. To calculate the price of buying currency – Amount of Sterling x Exchange Rate

Activity 8b and 8c Read over the Case Studies on pages 135-137 Complete Activities 8b and 8c

Banks and Foreign Exchange Bureaux These are the main places where people can get foreign currency. Both make money by: Selling to you at a low rate and buying back at a high rate Charging commission Look at the case studies on page 138

Using Money Abroad There are 3 main ways of making sure you have local currency to spend when you arrive: Buy notes and coins in that currency Buy Traveller’s Cheques Use a plastic card

Exchanging abroad You can also exchange currency when you are abroad using the following: Banks Bureau de change At the Reception Desk in the Hotel

Activity 8d, 8e, 8f and 8g Read pages 139 to 143 Complete Activities 8d to 8g in your class jotter.

Using Plastic – Debit Card You can use at ATM’s Shops and Hotels Look for Cirrus, MasterCard or Visa symbols The amount you spend will be converted into sterling when it is debited to your account

Using Plastic – Credit Card If you have a credit card you can use it anywhere displaying the MasterCard or Visa symbols. The credit card company will convert the amount of foreign currency you have spent into sterling. You will see what you have spent in your next credit card statement

Using Plastic – Prepaid Cash Card This is a card which is pre-loaded with cash and then used to withdraw the money at an ATM or to make purchases. Once the money is used up the card cannot be used again until more money is loaded onto it. The benefits of these cards are that you don’t have to carry currency around and they also help you not to overspend.

Review Questions Read over the Topic 8 notes again Answer the Review Questions in your Assessment Jotter. Complete the Learning Activities on Page 147