Currency conversion is what?

In financial news, you can often find the term "currency conversion". But not everyone knows the meaning of this phrase.

In general terms, currency conversion is the exchange of one currency with the currencies of other states. It can be carried out both inside the country and abroad.

Types of currency convertibility

There is a freely convertible, partially convertible and non-convertible currency.

Freely convertible is a currency that is exchanged in any country in the world. There are few such currencies in the world. This dollar is American and Canadian, euro, yen and others. Freely convertible currency is a big advantage for the foreign economic activity of the state.

Partially convertible is a currency that is not exchanged in all states. Thus, the Russian ruble is a partially convertible currency.

Non-convertible currency is the currency of a state that changes to foreign currency only with the help or permission of the central bank.

In addition, the conversion is external and internal, current, capital and so on.

External conversion is an opportunity to conduct currency exchanges by non-residents, and internal conversion is the same, only for residents.

Advantages of a freely convertible currency

If the state's monetary unit is freely convertible, then this indicates the developed state of the economy of the given state. The conversion of foreign currencies by market participants indicates that they trust it. Therefore, citizens of the state with a freely convertible currency have a fairly high standard of living.

Russia also seeks to make its currency freely convertible, at least in order for settlements between states that buy from Russia to be conducted in rubles, not in dollars or euros. Thus, this will raise the level of the economy and raise the ruble to a qualitatively different stage of development. In addition, the status of Russia with a freely convertible currency will also grow.

Currency conversion is cash and non-cash transactions

In the event of a cash transaction, it is proposed to convert the currency in the bank, the exchange office or at the ATM by withdrawing money from the bank card. Cash conversion is very popular.

Meanwhile, non-cash currency conversion is often much more profitable than cash. This operation is carried out, for example, in electronic purses, electronic payment systems, online in the personal account on the bank's website, where an account is opened and, of course, with the help of bank cards.

Currency conversion is one of the types of transfer of funds between accounts. Money is transferred from one currency account to another, usually in electronic form. To perform this type of operation will require a smaller commission than with a cash conversion, and in some systems the commission will not be charged at all.

How the currency is converted online

The tool for currency exchange online is the so-called currency converters or currency calculators. Thanks to them, the currency is automatically converted at the rate set by the Central Bank of Russia. All calculations are carried out in real time.

Converters can navigate by date. Thus, it becomes possible to make calculations based on the value of the currency as of a certain date. Thanks to this function, the user can compare the results of calculations and decide whether it is worth to convert the currency now or better wait.

How to calculate the commission charged when withdrawing funds from a bank card abroad

Many Russians today prefer to travel abroad do not take all the cash, and pay with the help of bank cards. It's really a very convenient and useful thing. The main advantage for tourists, perhaps, is its security, since even in case of theft, the card should be simply blocked, and then it will be impossible to conduct operations with it. With the help of bank cards, settlements are made, as well as currency conversion. This is the transfer of the currency of one country (which is on your card) to another (which you need at the moment to pay the bill or receive cash).

The main thing is to know for sure that you can pay off this card on a trip to the destination. It is also necessary to make sure once again that the card will be valid at the moment and during the trip.

In order to calculate what will be the commission withdrawn from the account when making payments abroad, it is necessary to take into account the fact that the commission is charged for all transactions abroad. Banks sometimes do not charge this commission, or they provide a small fixed fee or a percentage of the amount of payment.

Often people want to know before the trip how much they will receive when withdrawing money abroad. However, the bank certainly does not know this, because depending on the time, place, conditions of partner banks, the requirements of local legislation for the process of cashing out money, the amount can be different.