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?