Unravelling the mystery of foreign currency charges
Research by the Post Office late last year found that more than half of all holidaymakers were confused by the various charges they pay when buying foreign currency. Most people buy from their bank or at the airport. But by shopping around you can save as much as £25 on £1,000 worth of spending money. Read on as we untangle the mess and clear up the confusion!
Banks, building societies, travel agents and foreign exchange bureaux usually charge commission of 1 - 2% on currency purchases (notes), with minimum charges or a flat fee of between £2 and £3.50. They will usually charge an additional commission or flat fee on any travellers cheques you buy.
There is also some confusion over 'buy' and 'sell' rates. You will see up to four rates of exchange quoted - two for foreign currency (cash) and two for travellers cheques. Ignore the terminology. Banks will sell you currency or cheques at the lower rate, and buy them back at the higher rate. So, for example, if a bank is quoting $1.50 and $1.54 to £1 it will sell you $150 for £100, and it will give you £97.40 for $150. Other than commission, this difference is how banks make money from foreign currency.
The best places to buy your foreign currency and travellers cheques
You can buy your currency online via a number of foreign exchange companies. When we checked the rates, including commission and delivery charges, we found Travelex and the Post Office online to be the most competitive.
Travelex need 48 hours notice, but you can collect your currency from the airport. The Post Office online also delivers, or you can pick your currency up at your local Post Office.
The foreign currency and travellers cheques checklist - how to get the best foreign currency deal