Reassura Guide: To Not being Ripped Off on Your Holiday Cash
If last Sunday you had changed £500 into euros at Gatwick airport, flown to Paris, had lunch, flown back having not used any cash and you changed your Euros back to Pounds at the airport it would have cost you £163 just from changing the money back and forth. How come?
We all know that exchange places have a different rate for the price they buy a currency for versus the rate they sell it at. In this case they sold euros at 0.9685 to the pound and bought back at 1.4364. That’s 33%, you lose almost a third of your money not having spent any! This is slightly simplified because we have assumed that the rates did not move during the day, however big moves are very unusual, in fact the pound has only moved more than 4% in one day seven times in the last 20 years.
Is charging 33% “fair”, or is it a “scam”? That’s a dangerous one to answer but what we can say is, you can do a lot better.
We have used the same scenario on several of the big travel money names to see how they compare and put in some of the lesser known but better performers:
The best rate is gained by ordering by phone or online the day before and then collected from the branch. In our example this would cost you £72.62 of your £500 or 14.5%.
(Ordered online) £71.42 or 14.2%
The Post Office
£71.46 or 14%.
Marks & Spencer (ordered online)
£56.14 or 11.2%
Thomas Exchange (ordered online)
£26.62 or 5.3% (if over £750 it would only be 3.3% as delivery is free then)
TravelCards (Revolut, CaxtonFX, Post Office etc)
This is more complicated as you must open an account, be sent a card, download the app, and then load the card, however the cost can be as low as 2%.
What have we learnt?
The first lesson is do not change your money at the airport! After that its quite interesting. Most of the options we looked at had quite competitive rates to sell euros, ie when you change pounds into euros but had awful rates when changing the other way.
The Post Office was particularly competitive when selling euros. You can use your debit card to withdraw cash abroad which, if you opt to pay in Euros, it is quite competitive but the Nat West for example charges 2% or a a minimum of £2 and you still have the big cost of changing back.
So, in conclusion there are lots of competitive options for changing pounds into euros, except for the airport and to some extent the banks. However, if you want to change foreign currency to pounds you are better going to a specialist such as Thomas Exchange or the alternative is go bananas on holiday and spend it all!
Only ever use FCA authorized and regulated exchange companies.