Travel Money

Foreign Currency Exchange - How to get the most from your hard currency before you leave

By Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

Exchange rates vary wildly between bureaux de change so it's worth shopping around to get the best deal.

The holiday season is fast approaching and whilst plenty of us are making full use of the cheap travel deals currently available, many of us are not taking the same approach to currency exchange, often settling for the first offer we see and getting very poor rates indeed.

Once abroad, many people enjoy the convenience and security of paying for the majority of items by credit card but it is useful to have a bit of cash when you arrive (even if it’s just enough to pay for a taxi to the hotel and a bite to eat).

However much foreign currency you think you’ll need, it’s worth taking a careful look at the exchange offers available. Don’t just settle for one from your own bank or travel agent and don’t leave it until the last minute. A bit of shopping around and forward planning can ensure a much fuller wallet and plenty more to spend on that essential sombrero!

• What are my options?
• Is comparing worth the effort?
• Where can you check exchange rates?
• Where can you compare different rates?
• 'Commission free exchange’
• Is it worth exchanging more in one go?
• Is it worth exchanging currency online?
• Things to watch out for
• Left over cash – buy back
• Currency from a Cash Point Abroad
• Recommendations

What are my options?

Bureaux de change can be found in a variety of locations including banks, travel agents, hotels, airports, The Post Office (www.postoffice.co.uk), Marks & Spencer (www.marksandspencer.com) (who also offer commission-free Euros and US Dollars in cash machines in forty of their stores) and increasingly, online.

There is no definitive answer to who offers the best deal as rates change daily and can even differ wildly between banks and different braches of the same bureau de change company. However, Marks & Spencer and the Post Office do offer surprisingly good rates and with certain online companies, ordering your cash online and collecting it at a designated branch can often get you a winning deal.

The worst thing you can do is wait until you get to the airport. Bureaux de change within airports exploit the fact that you are in an enclosed environment with no other options for exchange and offer pitifully low exchange rates whilst charging high fees.

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Is comparing worth the effort?

In a word, yes. Exchange rates vary greatly and it really is worth shopping around for your cash.

Which? (www.which.co.uk) illustrated this clearly when they reported a saving of up to £35 between the least and most expensive when buying 500 euros at ten providers including banks, high street outlets and airport bureaux de change. Now, £35 would buy you a fair few plastic Eiffel towers…

Obviously the more money you are changing, the more potential there is to save or lose so the more important it is to find the best deal.

Rates do change from day to day so ideally you should do all your research and comparison on the same day and once you’ve found the best deal get the cash before the rates change

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Where can you check exchange rates?

You can get the up to date current rate of exchange using our currency converter on the site.

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Where can you compare different exchange rates on offer?

The Post Office, Marks and Spencer, and several high-street banks advertise their exchange rates online. However, if you are planning to exchange your money at a branch, it’s important to confirm the rates and amount of currency you will receive before you hand over the cash.

To compare online bureaux de change, you can use the Travel Money Maximiser, which allows you enter the amount you want to change and then compare the best online offers for you.

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‘Commission free exchange’

Many bureaux de change advertise “commission free” exchange, which means they won’t change you a fee to change your currency. However, this does not necessarily mean you are getting a better deal. Commission free deals are often balanced by poorer exchange rates – they have to secure a profit somehow and adjust their exchange rate to cover their charges. For example, if we have £500 to exchange at each of the following banks:

	Commission	$ Rate	Amount received
Bank A	£5 Flat fee	1.9	$940.5
Bank B	Free	1.85	$925

Bank A, although it charges a commission fee, offers a better exchange rate and ultimately gives you more foreign currency for your pounds. So, when comparing rates you must take into account:

• Exchange rates – which change daily
• Commission rates – whether they are a fixed fee or taken as a percentage of the amount you exchange
• Added fees - such as handling and delivery charges

Whilst this can seem confusing, the most important thing to keep in mind, and indeed the only fair way to compare exchange deals, is to work out just how much currency each of them will give you for your sterling.

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Is it worth exchanging more in one go?

If the deal is commission free or the commission is charged as a percentage and there are no delivery or handling charges then there is no financial advantage in exchanging larger amounts of currency.

However, if the commission is charged as a fixed fee or there are delivery and handling charges then the more you change the better deal you are getting.

Having said this, I would not recommend carrying huge amounts of cash. Although it is convenient, it is not secure. Check your insurance policy and do not carry more cash than you are covered for.

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Is it worth exchanging currency online?

The simple answer is yes - often the best exchange rates can be found online. But bear in mind that the delivery fee can cancel out this saving if you’re only changing a small amount of cash, so a way to get the most from an internet deal is to order online and then collect from a designated branch.

In this respect, Travelex (www.travelex.comwww.travelex.co.uk) clearly stands out. There are more than 40 Travelex branches at airports, ferry terminals and Eurotunnel where you can collect you pre-ordered cash, but what makes Travelex really stand out is its online price promise to beat any competitor’s deal. They claim:

“We will not be undersold online. If you find a better price offered by another foreign currency retailer (whether or not online) we will refund the difference between the price paid by you and the more competitive price”

Given their price promise and the convenience of collecting from a Travelex location, a shrewd move would be to shop around for the best deal and then buy through Travelex, informing them of the best rate you were offered elsewhere and claiming back the difference.

Note that the competing deal must be offered on the same day as you buy foreign currency from Travelex and if the deal is not online, you must contact them on the same day that it is offered. With Travelex it is crucial that you do pre-order online as the rates offered within the branches will undoubtedly be much lower than those offered online.

If you would like your cash sent to you, both Mark & Spencer and The Post Office offer free delivery on online orders over £500 (any amount below this costs £5 to deliver).

Order currency from the Travelex online today.

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Things to watch out for

• Banks, despite their expertise in the currency markets, rarely offer the best deal. Also, banks do not usually have all currencies in stock and you often have to order your cash 24 hours before you want to collect it.
• Be careful when paying for foreign currency. All credit cards and most Visa Debit cards will charge you a fee on currency transactions, usually about 2%. This can make online currency exchange much more expensive, so check the terms of your card and unless you have a debit card that does not charge for currency transactions it will probably work out cheaper to withdraw the cash and exchange it in branch.
• Some debit cards do offer free exchange transactions - for example Natwest (www.natwest.com), HSBC (www.hsbc.co.uk), RBS (www.rbs.co.uk), Halifax (www.halifax.co.uk) and Nationwide (www.nationwide.co.uk).
• Some countries, for example Morocco, India and Vietnam, have restricted currency laws that limit how much local currency can be imported or exported. Most bureau de change in the UK will not buy or sell these restricted currencies so if you are travelling to one of these countries you don’t really have a choice but to wait until you arrive at your destination to exchange your money. My advice would be to only change a small amount when you arrive at your destination airport (enough to get a taxi to your hotel etc.), as airports offer the least competitive rates, then find a bureau de change in the town/city you are staying in as these will offer much better rates.
• If you’re travelling to smaller countries or far-flung destinations, it’s always worth to take some emergency dollars. They are widely accepted and easily exchanged in most countries and although by paying for items with them you will pay slightly higher than if you were using local currency, they could save you from a sticky situation.

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Left over cash – buy back

If you have overestimated your spending habits and end up with a fistful of cash left over from your holiday, you will probably want to swap it back on your return.

When you buy your foreign currency, always ask about “buy back”. Many bureaux will offer special deals for customers returning from holidays with leftover cash.

However, the majority will only take back notes and if they do let you exchange coins it will be at a very poor rate due to the higher cost of storage and shipping compared to bank notes. So, it’s probably better to spend your loose change before you return - go on, treat yourself to that extra ice cream at the airport!

If you are travelling in a country with restricted currency, remember to change back any left over cash before you leave the country. Not only will you be unable to exchange it on your return, you might also be breaking the law.

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Currency from a Cash Point Abroad

If you need to withdraw cash abroad, both credit cards and debit cards will charge you a transaction fee. Credit cards have added charges which vary depending on the type of card and account you have but which you must always take into account.

Credit Card Charges Abroad

The exception to the rule, the only card provider which won’t charge you for making withdrawals abroad is Nationwide - lucky holders of their FlexAccount are able to use their debit cards to withdraw cash around the world for free.

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Recommendations

Both Marks and Spencer and The Post Office have offered consistently good exchange rates and are great places to start looking for the best deal. If you don’t mind doing your transactions online then you can’t go wrong with Travelex – their price promise ensures they can’t be beaten.

Exchange rates change every day and are complicated by additional charges. But with a little bit of research and a clear focus on the final amount you will receive for your pounds after all charges, you can save a lot of money and make the most of your well-earned holiday!

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