David Coveney

Currency exchange when travelling

I’ve often wondered about this – a lot of travellers take out traveller’s cheques or buy currency from their bank in advance. They often then exchange at banks when abroad.

As a regular overseas traveller I always felt, but hadn’t really researched properly, that ATM’s and credit card transactions were best – in spite of 2% commission charges.

Then I learned Nationwide makes no commission fees.

You then have the currency spread – ie, the difference between the price you buy and the price you sell. That’s pure profit. A lot of money changers in airports are working on up to a 10% spread. That means they’re taking 5% of your money each time you change. That’s a significant hit. If you expect to spend £1000 on your trip, £50 might easily make for an extra night somewhere, or a nice meal one day.

So after seeing a forum posting about this subject I decided to do some research and responded as follows:

Hmmmm… my experience of Travelex has been that they have a large spread on the currency prices, which usually means there’s a big profit somewhere. But interested by Stepehen’s claim I thought I’d investigate the website.

So, to the pound:

EUR = 1.4122
HKD = 13.1911
USD = 1.7021

Now let’s try my favourite with all things travel-money related. Nationwide:

EUR = 1.3937
HKD = 12.8700
USD = 1.6737

It’s a significant difference. However, I know Nationwide are using Travelex to provide their exchange service. So we have to pay extra to give both parties a profit, by the look of it.

But interesting.

Then my usual method – VISA debit card from Nationwide either to pay for things or from cash machines.

EUR = 1.46
HKD = 13.57
USD = 1.75

Though that’s what the website says, it looks like the figures are rounded in all those cases.

So far it seems to suggest that the mighty old card is better. Even if you take the usual 2% that most banks charge, you’re still better off with the ATM. Just. Having said that, the VISA site isn’t clear as to whether you pay more if you withdraw from a cash machine than if it’s a transaction in a shop.

Incidentally, the forex rate right now appears to be:

EUR = 1.45935
HKD = 13.498
USD = 1.73880

Which VISA actually appear to be bettering, though VISA’s prices may only change daily.

Shows to me that the exchange rate for actual cash is significantly more expensive than using cards.

I should now look at the exchange rates I get from banks for Euro cheques! Never looked so closely really and I’m convinced we get fleeced.

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