In this guest post, we’ve invited Daniel Abrahams from independent comparison website MyTravelMoney to explain the top 5 ways travellers get ripped off on currency….
1. Believing 0% Commission Slogans
Last year, we ran a survey asking customers their perception on ‘0% commission’ adverts at currency bureaus. The results were startling. Our research team found 74% of UK holidaymakers perceived this kind gesture to equate to ‘free’ travel money. The reality is somewhat different. Unfortunately, 0% commission is merely a marketing tactic and does not equate to free currency in any way, shape or form.
The golden rule to remember is that all currency companies add a ‘markup’ to the ‘real exchange rate.’ The competitiveness of the exchange rate alone will determine whether you have got a good or bad currency deal. The tighter the mark-up, the cheaper your travel money.
2. Buying at Airport Bureaus
Airport bureaus are the world’s most expensive place to convert currency. They add markups of around 10% to the real exchange rate. In real money terms, this equates to you paying circa £50 on every £500 worth of currency you exchange. Why? Airport bureaus have to contend with extortionate rental costs. As a result, cost is passed on to the customer with very poor exchange rates.
Buying currency online works out overall cheapest. For example, our live online Euro rates checker displays markups typically inside 1.5% away from the real rate of exchange, saving you a small fortune versus the airport bureaus and high street. The secret? It pays to shop around.
3. Using the Wrong Type of Plastic
Knowing the best way to spend with plastic abroad can also be a great way to avoid burning cash abroad unnecessarily. It’s highly recommended to get a specialist travel debit or credit card for overseas trips. Check the international charges related to: ATM withdrawals, point of sale transactions and load fees.
4. Using ATMs Abroad
ATM charges abroad can quickly accumulate. Some providers will cost you from £1.50 to £2.00 every time you withdraw cash. Once again, there are some specialist cards on the market that will eliminate international ATM charges. Look out for cards that offer ‘fee free foreign exchange transactions.’ Be careful though of not being overdrawn, as the cost saving you may make on ATM charges can be wiped out by late payment fees and interest charges.
5. Not Knowing about Dynamic Currency Conversion.
Dynamic currency conversion is a sneaky tactic adopted by restauranteurs and businesses abroad.You can learn more about it by watching this short video:
Have you ever paid for a bill and been asked the question: ‘‘Do you want to pay in pounds or Euros?’’ If this sounds familiar, next time you are posed the question always always pay in the local currency. By selecting to ‘pay in pounds’ you are essentially giving free reign for the overseas businesses to choose the rates they will apply. And they will really take you to the proverbial! It can push the real cost of conversion up to 6% plus.
Thanks for reading, I hope this helps you to get a good deal on currency for your next holiday abroad.
About The Author
Daniel Abrahams is the Co-Founder & Head of Partnerships at MyCurrencyTransfer & MyTravelMoney – the UK’s leading foreign exchange comparison websites. Last year, the company won an OPP award for best online service.