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Saturday, October 16, 2010

If Free travel wasn't good enough - how about free travel money! (seriously)

This is really for the Australian readers right now but at different times it works for everyone.

This week the Australian dollar reached parity with the $USD for the first time in 28 years or so. It might last for a little while longer but the smart money would say this is a temporary situation. If you are traveling between now and February - awesome for you. Your shopping, eating, transport and sleeping whilst OS in most destinations is going to be cheaper or go further.

Of course if you are following the original post of this blog then this is mainly irrelevant to you because you are traveling for free anyway. I say mainly because you will still have some food, drinks and souvenirs to buy along the way. If you are planning your trip for the future then you can now have the opportunity to get those things for free as well.

How do you do this?

Instead of putting some money away for your vacation by leaving it in your savings account I recommend either changing that money to USD whilst the rate is at this historic high OR changing them into USD travelers cheques (safer to carry, replaceable is you lose, pay more commission for them initially for these benefits).

For example you change $1000 AUD into $USD today you'll get about $950 USD. The bank is keeping the other $50..... When you travel in 8 -12 months time it is very likely the US economy will be picking up and the AUD will be back in its natural habitat around the 85 cent mark which means you would be changing for 80 cents and getting $800USD for your $1000 AUD. You now have a $150USD more to spend. If that is all you spend then that money was free!!!

This of course only works if traveling to country that uses $USD or has its currency tied to the USD. It wont work for example if you are thinking of going to Europe. The AUD appreciation has been far slighter against the Euro and the gains will be eaten by the commissions of currency changer.

There is also the slight risk that the AUD could stay high (or go higher) by the time you travel (ie the US succumbs to double dip recession) so you'll have to assess whether that is a risk you are willing to take.

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