As the won-dollar exchange rate has soared to its highest level since the 2009 global financial crisis, the burden is growing for people who need to travel abroad or send money overseas. Experts say it is advantageous to use a "travel card" when going on an overseas trip, and to use dedicated products with high preferential rates when investing in foreign currency deposits or U.S. stocks.
When banks conduct a transaction with regular customers in dollars, they apply the base exchange rate and add a fee (spread) to earn a profit. According to the Korea Federation of Banks, the currency exchange fee rate at banks, excluding the Industrial Bank of Korea and Suhyup Bank, is 1.75%. If the base rate is 1,500 won, a customer pays 1,526.25 won to buy $1 and receives 1,473.75 won when selling $1 to the bank. The dollar exchange fee rate at bank branches at Incheon Airport reaches 4.2–4.25%. The fee also includes the expense of transporting and storing cash.
Banks apply preferential exchange rates to some customers, and the travel card, a debit card for overseas travelers, offers a 100% preferential rate. A 100% preferential rate means the bank exchanges currency without taking a profit. With a travel card, you deposit exchanged dollars into a foreign-currency account, and when you pay locally, the payment amount is debited from the account. The payment fee is also waived.
A travel card is useful even when you need cash. If you exchange currency using a bank application (app) or by visiting a branch, the preferential rate is 50–90%, but if you exchange into a travel card account and withdraw dollars from a local overseas ATM, you can enjoy a 100% preferential rate. Some travel cards do not charge overseas ATM withdrawal fees.
Some banks offer a 100% preferential rate benefit on foreign-currency deposits. Toss Bank has introduced a foreign-currency account that offers a lifetime 100% preferential rate benefit, and Hana Bank's "Hana exclusive account for overseas stocks" offers a 100% preferential rate through the end of this year. You can also buy U.S. stocks with the exchanged dollars.