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We all know that going on holiday isn’t cheap. Flights and hotels are more expensive than they used to be and spending money doesn’t go as far as it once did to due to inflation and exchange rates being unfavourable for many currencies. To make things even worse, when it comes to actually exchanging their currency, most people unknowingly get a really bad deal.
The majority of companies advertise their currency rates as being commission free which makes people think they are getting a good deal. What banks and foreign exchange bureaus don’t advertise is that they take astronomical margins on the currency when then pass it on to the holiday maker. See, when a bank or bureau buys its currency, it does so either at the market (Interbank rate) or even better for them, at an even more favourable rate from another tourist. They then add-on a massive percentage and sell it on.
The “Buy Back Rate”
If it is likely that you are going to bring back foreign currency after your travels, it is definitely worth considering a company that offers a “buy back rate”. This essentially means that you are not paying a second time for the exchange. Most people spend all of their currency on their holiday or at the airport though so this won’t apply to everyone.
Banks facilitate the transfer of the vast majority of foreign exchange transactions. Too many people put excessive trust in their banks and are oblivious to the fact that they are too, one of the more expensive ways of exchanging currency. This applies to both international transfers and travel money. Unless you are happy to pay a high premium for using your bank’s services, we would strongly advise you to consider using other options.
The Currency Broker
Not all specialised currency brokers handle foreign exchange facilities for smaller amounts of money. They tend to prefer larger amounts as they can make more profit. Some brokers though will facilitate transfers worth £500 and more. It is worth checking out the comparison table at exchangecurrency.com to see the minimum required amounts with each of the main currency exchanges on the market.
Summary. Travel money is never going to offer the best rate of exchange as it is low volume and less profitable than bulk international transfers. Having said this, there are ways you can go about saving money. If you have time until you travel, you are going to want to speak to one of the big currency brokers. Travelex and Moneycorp both offer market leading rates and Travelex actually guarantees that you won’t find a better tourist rate elsewhere.