I’ve been on Sky News, BBC News and LBC today talking about the super-complaint from the excellent Consumer Focus about dodgy practices around foreign currency conversions.
It’s true. It’s a minefield as we explain in this piece on getting the best deal on foreign currency.
Those deals that say ‘commission-free’ really aren’t necessarily so. Many incorporate charges that you only see in the small print.
The worst offenders are credit cards, most of which charge you 2.75-3% when you use them abroad. And you have no control over the exchange rate used.
Not only that, but if you change money here using your debit card you can be charged stupid amounts. Banks and credit card providers charge customers cash withdrawal fees when buying travel money with a card in the UK. These charges do not reflect actual costs – a debit card payment costs on average 9p to process and a credit card payment just 37p, yet charges for buying currency with a card are typically 1.5-2 per cent of the amount converted (up to a ceiling of £4.50).
The secret is to shop around and also use cash where possible. Personally I try to change money before I go, taking mostly cash with me. I keep meaning to open up a prepaid currency card too because those can be useful, particularly if you get one that fixes the exchange rate when you load it in the UK. We have a list of those in our cheapest foreign currency article.
Not a lot of people know it, but you can actually haggle on the price of foreign currency if you go to a few different, independent money-changers. If you’re in London or a large city, try three or four high-street kiosks and play them off against each other. You can bring down their rates just by haggling. Give it a go!
Even if you shop around it’s still confusing, though, which is why this super-complaint by Consumer Focus is such a good idea. Well done them. Let’s see what happens!