Guide to buy and exchange currency
Currency exchange facilities
When buying or selling foreign currency it's worth taking a careful look at the ofers available. It is common to rush to a local bank or travel agent, but a careful planning can save you money with specialist FX providers weather your are purchasing holiday money or making payments for your overseas property.Foreign exchange transactions can be made at almost any bank, they are pratical and convenient but the rates offered are one of the worst amongst providers even including their commission free policy.
Bureaux de Change are the high street alternative to banks and you can find them in shopping centres, supermarkets, rail stations, hotels, travel agents and airports (which have been reknown for offereing a not very competitive rate and including extras fees and charges on transactions).
Surprisingly, the same high street providers offer better deals online, and it's worth ckecking their exchange rates at the branch and see how they compare with other bureaux.
For a list of foreign exchange providers please visit our travel money listing, where you can check the Euro and US Dollar rate and charges by provider.
Commissions, fees and charges
For many years was very common to pay commission on foreign currency transactions. In reality, providers would offer a better rate and make their profits from commission or handling fees usually between 1%-3% (or fix as minimum £3-£5).In a sentence 0% commission do not always carry a better value tag. Providers will make the loss of the commission on a higher exchange rate. Due to the nature of the internet, most providers offer comission free online and a better exchange rate online.
Marks and Spencer and the Post Office are a clear example where their high street prices are very competitive but online they are far behind other fx specialist companies like Travelex, FairFX and International Currency Exchange (ICE), which offer best rates online but on the high street customers are expected to pay a commission.
Other charges customers face online are handling fees to carry out the transaction and delivery fees plus shipping insurance.
Buying online securely
When buying currency online, not only check the rate and fees associated with the transaction but also how secure payments are made and guarantees on delivery. Most providers use Royal Mail Special Delivery which guarantee next day delivery, however in case of parcels lost or stolen you must contact your fx provider and alert them of the situation.Traveller cheques
Cash is the easiest way to take money abroad, however not the most secure and once it's lost is irreplaceable. This is where travellers's cheques can come handy.Cheques can be bought in different currencies including Sterling Pound, Yen, Euro, US Dollar and Australian Dollar. Commonly they are issued by American Express and sold throughout banks, travel agents and foreign exchange bureaux in the UK.
The main benefit of carrying travellers cheques is that they are lost or stolen can be replaced inmediately to 24 hours. Make sure all cheques are signed and write down the issue number in a notebook in case you need to report them lost.
The downside of the cheques
Even though travellers cheques can offer security and peace of mind, there are charges to take into account like 1%-3% commission and handling fees when bought on the high street. Online you can expect commission free on foreign currency cheques but a 1% - 1.5% on sterling cheques.Other common complain it's that they are difficult to cash in and some shops won't accept them at all, hence the recent popularity in prepaid debit cards and foreign currency cards.
Buying into plastic
With all the charges, fees and issues with taking cash and cheques abroad, some travellers find using their cards as a safer and less complicated alternative.When using a credit card be aware of the charges for cash withdrawals, interest and dynamic currency conversion (which is the charge for using your card on overseas countries and view the transactions in Sterling equivalent).
Some of this charges can be avoided by using prepaid currency cards where generally you are offer a better exchange rate. Read our guide to use cards abroad for more information.
