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commission free foreign currency and travellers cheques

 

First a quick tip - if you buy your foreign currency and travellers cheques online and pay via a debit card with 1st Holiday Store.co.uk and Onlinefx you'll get it commission free, delivered free delivery. Order by 14:00. and your currency can be delivered to your home or work by 17:30. the next day. Click here to check their rates.

(NB: If paying with Switch, Delta and Solo cards, just type "free delivery" in the Promotion / ID box at payment stage.)

Beware foreign currency charges
Research by the Post Office found that more than half of all holidaymakers are confused by the various charges they pay when buying foreign currency. Most travellers buy from their bank or at the airport. But by shopping around you can save as much as £25 on £1000 worth of currency.

Banks, building societies, travel agents and foreign exchange bureaux usually charge commission of 1 - 2% on currency purchases (notes), with minimum charges or a flat fee of between £2 and £3.50. On top of this they will usually charge an additional commission or flat fee on any travellers cheques you buy, so if you buy currency and travellers cheques, you can end up paying twice.

There is also some confusion over 'buy' and 'sell' rates. You will typically see four rates of exchange quoted - two for foreign currency (cash) and two for travellers cheques. Ignore the terminology. Banks will sell you currency or cheques at the lower rate, and buy them back at the higher rate. So, for example, if a bank is quoting $1.95 and $2.10 to £1 it will sell you $195 for £100, and it will give you £92.85 for $195. Other than commission, this is how banks make money from foreign currency.

Where to buy your foreign currency online
You can buy your currency online via a number of foreign exchange companies. Each time we check the rates, including commission and delivery charges, we find that Onlinefx, Travelex and The Post Office online are the most competitive.

As mentioned above, pay via a debit card with Onlinefx and get 0% commission and free delivery. Order by 14:00. and your currency can be delivered to your home or work before 17:30 the next day.

Travelex need 48 hours notice, but you can collect your currency from the airport. The Post Office online also delivers, or you can pick your currency up at your local Post Office.

A foreign currency checklist

  1. 'Commission free foreign currency' usually means commission free foreign cash. You will still be charged commission on travellers' cheques.
  2. Don't leave buying your currency until you get to the airport. You won't get the best rate, you will pay commission, and they may not have the amount you want.
  3. Shop around and do your sums. For the amount you plan to buy, is it cheaper for you to pay commission with a low minimum charge or a flat fee?
  4. Check the rate of exchange too. Some 'commission free' offers offer a poor exchange rate. It might be cheaper to pay commission but get a better rate.
  5. The Post Office don't charge commission on foreign currency purchases for 30 major foreign currencies. For smaller currency purchases this can represent a saving, but for larger currency purchases make sure you check the exchange rate against other providers. Also, although foreign currency travellers cheques are commission free, the Post Office (and most other 'commission free' outlets) do charge commission on sterling travellers cheques.
  6. Consider buying online. Most online companies do not charge commission and will deliver to your home, your work, or you can collect the currency at the airport.
  7. A less obvious place to consider is Marks & Spencer. Many of their larger stores have a Bureau de Change offering currency and travellers cheques, and their rates are amongst the most competitive.
  8. Minimum charges make it expensive to exchange small amounts. If you are travelling with a group you might want to make one combined currency purchase, rather than everybody buying their currency individually.
  9. Don't forget that you can draw cash abroad on most credit and debit cards using your normal pin number. The ATMs will recognise that your card is 'foreign' and offer you instructions in English. But note: your card issuer may charge a transaction fee of between 1.5 - 2%, a 'currency loading fee' (they adjust the rate downwards, by between 0.5% and 2.75% depending on the bank) and on credit cards you may be charged interest. However, it is still a convenient way of drawing your holiday money and great for unexpected purchases.
  10. Don't be persuaded to take more currency than you need on the strength of 'commission free buy back' offers. Although you won't be charged commission, the currency will be bought back at a lower rate, so you will still lose out, typically by around 5% - or £5 for each £100 extra you buy.

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