/ Money, Travel & Leisure

Currency exchange: how long do you wait to get the best rate?


Lengthy queues, poor customer service, but a good exchange rate. What are you willing to put yourself through to secure the best deal on your currency exchange?

When it comes to choosing a currency exchange provider, I have always put the best conversion rate at the top of my list. Four in ten Which? members feel the same, putting rates ahead of location, convenience and trust in the brand itself.

Of course, if exchange rates were of the utmost importance, I’d probably be ordering my money online where more favourable exchange rates are usually available. But, like nearly six in ten Which? members, I always end up exchanging my money in store.

Best currency rates vs convenience

This brings me to a late-summer afternoon in the town of Kingston. As usual I’d left it too late to order my currency online. The thought of exchanging my money doesn’t fill me with joy, so it’s a task that usually ends up in the ‘must do’ pile alongside booking my airport parking and buying suntan lotion. And this holiday was no different.

I wasn’t totally unprepared however. I’d done my usual research before heading out, finding out who was offering the best exchange rate for Euros that day. I parked up and headed for the store.

As I approached the Bureau de Change my frustration levels rose as I saw the queue. I’d faced a similar queue here before – yes, I was becoming an expert on currency exchange queues. It was one of those annoying queues that doesn’t look too long, but 20 minutes later you’ve moved about four places along the line and are left ruing your decision to stick it out. Not this time.

I got straight on my smartphone and looked up the exchange rate for a travel agent on the high street. The rate wasn’t quite as good, but a quick calculation and I soon realised that making the switch would cost me less than a pound. I might even save money on the extra car parking costs I’d have to pay for sticking around in the Bureau de Change. I nipped straight over to the high street travel agent – no queue and they even matched their online rate, so I ended up with a better deal!

Do the best currency rates top your list?

What’s the moral of this story? For me, it’s that although the exchange rate is important, I now consider convenience to be just as important. Most Which? members exchange between £100 and £299, so check the rates to see what the real cost is to you. Is the difference worth the extra petrol money, queuing time or parking costs?

So, what’s the most important factor for you when exchanging your holiday money?


I’m never taking more than about £300 worth with me in cash, so convenience is the major factor.
I can walk into my local Post Office and get Euros over the counter without any hassle and the exchange rate is competitive.
Okay I’m in a minority living and working in a small town but hunting around to save 2 or 3 pounds is for me not worth it.

Do not change cash between currencies; instead use cards for purchases and cash withdrawals. An electronic form of payment is inherently cheaper than changing banknotes because extraterritorial cash is expensive to handle. When you use a card, Visa or MasterCard obtains a wholesale interbank rate and no money crosses borders. GBP is paid between UK bank accounts and the foreign currency is paid between bank accounts within the foreign country. When you change cash, either in the UK or abroad, one currency will always be extraterritorial, i.e. outside its home country. If you change cash in the UK, the foreign cash will be extraterritorial, or if you change your cash abroad, the GBP will be extraterritorial. Physical cash is inherently expensive to handle, extraterritorial cash even more so.

In the wholesale banknote trading markets, cash is consequently traded at a premium or discount compared to electronic funds, and the premium or discount depends on several factors. For example the physical state of the banknotes is relevant; in Russia and other parts of Eastern Europe a pristine state is expected. The denomination is also relevant because smaller denominations are more expensive to transport. Another factor affecting some currencies is the issuer of a banknote; for example there are multiple issuers of GBP and HKD banknotes, and Scottish banknotes have a lower wholesale value than Bank of England banknotes. Added to these wholesale costs are the retail costs incurred by bureaux de change, such as employing staff and the potential movement of the wholesale interbank rate while a bureau de change holds the cash. Forget taking cash between countries unless you want to pay unnecessarily for these many costs through a worse exchange rate.

Although Visa and MasterCard obtain a wholesale interbank rate, many UK card issuers subsequently add a percentage fee (often up to 3%) for non-GBP transactions. Given that the card issuer does not partake in the foreign exchange element of the transaction, any such fee is not for foreign exchange but a fee for nothing, feasible because many consumers are less sensitive to or observant of fees when the transaction currency and billing currency are different. You can avoid such fees by getting one of several cards suitable for overseas spending, e.g. Halifax Clarity.

I haven’t changed money in a bank or bureau de change in years. That’s what cash dispensers are for. If it does cost a few quid more over the length of the trip then too bad. Apart from all the flap involved, I’d never dream of carrying several hundred pounds in cash around here, let alone abroad. Life is too short.

Cash machines don’t have to cost more. With Halifax Clarity for example, if you withdraw cash and pay it off the same day by online banking (and most banks have mobile banking apps to facilitate this), then there will be no interest or other fees.