/ Money, Travel & Leisure

Currency exchange shouldn’t be a money mystery

pile of bank notes and coins from around the world

With every news story about Greece’s impending default and the collapse of the European dream, Brits are feeling smugger than ever for sticking by sterling. But why is it so pricey to change our cash?

It won’t last, just wait till the next holiday. While we try and unravel the mystery of currency exchange – and inevitably leave it to the last minute at an airport Travelex cursing the heavens – our continental brethren are gallivanting across borders without a care in the world.

Well, that’s if they still have a currency to gallivant with and haven’t resorted to a barter system based on wine and cheese.

But thankfully for us The Office of Fair Trading (OFT) has announced it will investigate currency fees following a super-complaint from Consumer Focus. Apparently it’s all a bit of a rip-off, who would have thought?

Excessive and confusing fees

The key issues that they will look at are reassuring familiar, a bit of transparency and confusing pricing here, a splash of excessive fees there. Here are the key issues:

  •  Charges for using debit and credit cards abroad are confusing and complex, making it difficult for people to accurately compare costs.
  •  Card providers charge excessive fees when buying travel money with a card in the UK, typically of 1.5% and 2%.
  • Marketing phrases like ‘commission free’ and ‘0% commission’ are misleading due to hidden mark-ups on exchange rates, again making it difficult to compare.

These issues are fairly well known, but in some cases very difficult to prove, so it’s great that the OFT is looking into it. If consumers can’t accurately compare products the market’s not working, plain and simple.

Avoiding exchange fees

But some of the key points – particularly around fees charged by card providers – are easily avoided. We’ve always advised people to withdraw cash before exchanging it rather than paying by card, which is also easy enough to do unless you want to buy online.

Likewise, our travel money reports highlight the big differences in charges from the different banks. The report given to the OFT pointed out that changing £500 into Euros would cost you £32 with Barclays compared to £12 with ICE. Likewise, using your Lloyds TSB debit card abroad will see you hit with a 2.99% loading rate and a £1 minimum charge.

So what do you think? Is this an issue that needs greater clarity? Do all the niggling fees and charges annoy you, or do just accept them as a cost of holidaying? Or do you have any time-tested tips and tricks for getting value on your currency?


This can be a confusing area. My credit card provider apparently charges me a 3% loading on foreign purchases, but such a loading has never been itemised on any statement I have had from them. I now use a credit card with no loading, and as far as I can make out the exchange rate used is the “official” VISA rate, so no back door charging there.

For the folding stuff, I use a Caxton Card. Works very well and the exchange rates are competitive and of course fixed once you have purchased the currency. I do have a slight concern that there is no FSA protection for these types of cards. I tend to load the cards when I see a good rate; at the moment I have $2,000 on one card, which I won’t use until next May, but at $1.63 the rate was too good to miss.

I find it incredibly confusing to work out the best way to get money exchanged when abroad. I used to use Nationwide’s account, which didn’t charge you for withdrawing or making payments abroad – it was a godsend when I went travelling for six months, but they’ve now introduced fees.

When I went to France in the summer I got a card from the Post Office where you put money on it and can then use to make transactions abroad for no coast. But she did warn me that my bank would charge me for loading money onto it initially, only she couldn’t tell me how much it would be. When I looked at my statement it was around £18 – that seemed ridiculously high and unnecessary.

Mike says:
1 October 2011

II usually get my cash from Tesco using my Tesco credit card. There is no fee if you use this card and they usually give you one of the better exchange rates.

Actually, the OFT needs to investigate the exchange rates that people such as Travelex offer. Last time I was at the airport they were offering 1.04 euros for one UK pound, but buying back at the rate of 1.29 Euros per pound. Thats a whopping 25% comission if you buy currentcy and sell it back. No way can this be justified. In fact, a figure of 2.5 % still sounds expensive. Major tip – never buy currency at the airport.

roger says:
2 December 2011

I think it’s disgraceful the way this is being pulled the wool over our eyes of consumers. I went on a fambily holiday to the silesian belt recentlyand you’ll never believe some of the chagres I came across! Could you give me advices pleas

Niko says:
7 August 2012

The exchange rate system is yet another form of institutionalized theft.

AVOID USING TRAVELEX CASH CARD AT ALL COST. I bought mine last year and it worked fine then. Now I want to use it again abroad, but now I find it won’t reload online, like they say it can, but makes me call their “customer Service” call centre where they tell me “We don’t know why you can not reload your card online, but we will be glad to reload it for a 2% commission on top Oh and by the way we are deduction £3.50 every month you don’t use the card because you don’t use the card until you either reload, or your balance runs out. Can’t reload online? We can gladly do it here on the phone for 2% commission. Maybe they should call their company GYPSYEX?