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Getting The Best From Your Currency, Choosing Where
To Exchange
Getting the best from your currency and choosing where to exchange are two of the most important considerations for the modern-day tourist.
Now, there are many ways to exchange currency and various institutions, whether they be banks, travel agents, the post office, or online companies, and they are desperate for your business.
Firstly, before you think about exchanging any money, have a look at the currency you intend to buy. And when looking for currency deals, it’s best to look up tourist currency exchange rates online, or in the newspapers. Don’t turn to the City pages, unless you are Forex dealer looking to take a turn on a million dollars.
There are a plethora of online sites that will give you a rough conversion rate. You type in one pound, you press convert to dollars, and up comes the result: one Great British Pound equals 1.73424 U.S. dollars (as this article is written). But it does change, usually on a daily basis.
Getting that figure is a good start, but this is a mid-market price. The people who trade currency offer buy and sell rates - the difference is their margin and how they make money. So when buying currency, you will need to have a look at their sell rate. Also, in the not too distant past, you usually had to pay a commission for the priviledge of buying foreign currency. Nowadays, most transactions are commission free, although that usually means a slightly worse currency exchange rate, as the traders have to make their money somewhere.
A lot of online sites don’t even show sell and buy rates, just the rate if you want to buy some dollars. At one of the busiest online sites for tourists, they, at the time of writing, are offering 1.7025 dollars for one pound (note the difference from the above example). They also offer a better rate if you are buying forward – in other words, if you can wait say over 50 days for your dollars, you can get 1.7600. Now, so what you might argue, but at £100 you’re getting $6 more at the higher rate and for £1,000, you’re getting $57.50. You have to decide if you can afford to give your £1,000 to someone else for over 50 days.
So once you’ve worked out your rate, you have to choose who to buy them from.
The high-street banks are very convenient and hold most of the popular currencies. Also, you might have an account which gives you a special currency exchange rate. And whatever the banks don’t have, they will order for you in a matter of days. But they don’t offer the most competitive rates. Same goes for the Post Office: convenience and popular currencies, but not the best rates. Ditto travel agents, who are used to providing currency and will not let you down.
The best advice is to spend a bit of time shopping around.
But, there’s one more thing to consider. Do you get your foreign currency in the U.K., or wait until you go abroad? Sometimes, withdrawing money from your current account, or from your credit card (although watch out for cash advance charges on your card), via an ATM, might prove a better deal.
Getting the best from your currency and choosing where to exchange is worth a few minutes thinking time before you leave on holiday. It might save you a few pounds.
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