When searching for the best foreign currency exchange rates UK citizens are prone to make easy mistakes. According to the Post Office we waste £25million at the Bureau de Change every year. That's despite the bureau charging people 11% over the odds according to a study from YouGov.
Once you factor in commission, exchange rate, delivery fees and anything else people may throw your way, the cost of changing one currency to another starts to add up. It pays to spend some time working to minimise the amount of money this sucks up. Here are a few do's and don'ts to remember which can help you get the best deal on foreign currency exchange rates.
Don't... use the Bureau de Change This is by far the most expensive way of changing money and according to a YouGov study will cost you around 11% extra in exchange rate and commission. If you were to change £600, that's £66 gone straight away.
Do... shop around to compare foreign exchange rates The more places you look the better the chance of getting a great deal. With a growing number of high street providers now taking to the virtual world in order to plug their wares, the internet is now offering some of the best foreign exchange rates for cash. Not only does it allow you to search a greater number of providers in a shorter space of time than ever before, but many will offer discounts especially for people who shop online.
Some of these online providers will allow you to order money through them and collect it at the bureau de change. Others will deliver the money to your home, although you'll need to leave enough time before the order arrives. Most will take a few working days, but you'll have to ensure you're at home when they arrive as someone will need to sign for it.
Don't... forget the risks The foreign exchange sector is not regulated in the same way as some other financial services which means your money may not necessarily be protected. Some will say they are FCA registered which provides a degree of reassurance, but that's a world away from being FCA regulated, in which case they would have to guarantee the safety of your funds.
Do... Understand the lay of the landÂ Make sure you're up to date with the current exchange rate. These can fluctuate from day to day so keep an eye on it for a while until you get a good idea of what a good deal looks like. This will give you a base against which you can compare any deals you find.
Also, it helps to understand the jargon. Terms such as the buy rate - at which you by the currency with sterling on your way out can be more expensive than the sell rate at which you give your money back. This can lead you to expect a better deal than you get.
Don't... take anything at face value When making a foreign currency exchange rate comparison it's all too easy to look at the exchange rate alone. However, there are many other forms of costs which you can build up. For example an attractive exchange rate may be offset by hidden charges such as delivery fees or commission.
Mandatory minimums can also be a bit of a minefield. Some companies will offer what seems to be an excellent rate, but this depends on the transfer rate being high. For smaller sums the rate can become increasingly loaded against you.
For clarity's sake, you should ask to get an exact figure for how much you'll get. Most providers will be happy to tell you while online services should have a calculator to do this for you.
Do... consider alternatives Rather than changing large quantities of cash, you can take another route to find the best travel money exchange rates.
Depending on your bank it may be cheaper to withdraw money from an ATM with your debit card. This may well be charged at the interbank rate - in other words the internal (and much cheaper) rate that banks charge each other.
However, your bank may also charge a substantial fee for making a withdrawal in a foreign currency. Before you leave, contact your bank to find out what their approach to foreign transactions is and decide whether you think this would be a cheaper option.
Another option... might be prepaid cards These are becoming increasingly popular and avoid the necessity of carrying large quantities of cash around with you. All you do is load up a card with funds - you can then use it overseas as if it were a debit card.
Whatever option you choose, the secret is to do your research and cover as many providers as possible. In so doing you'll ensure you'll find the best deal for the amount you want to change and the location you want to visit.
To compare best foreign currency exchange rates, try our dedicated comparison table. Alternatively, if you're interested in a specific currency we have those too. For example, if you're looking for the best foreign exchange rates for Euros try this comparison table, while we also have one dedicated to dollars.