Currency shops bow to change

IT HAS long been a mystery for travellers buying foreign currency: why do they have to pay for the service twice? There are charges, commissions and handling fees on one hand, and a difference or "spread" between the buy and sell price of up to 10 per cent, on the other.

To buy pounds 150 of sterling traveller's cheques and pounds 50 of French francs from the Woolwich Building Society will cost pounds 8 in commission and fees. If you return with spare foreign money, it will charge pounds 4 for changing it back into sterling.

At the time of writing, the spread on the French franc ranged from almost 4 per cent at the Alliance and Leicester to nearly 9 per cent at Barclays - a huge margin over the 1 per cent (or less) spread on the wholesale currency note rate.

Derek Coles, director of currency services at Barclays, claims the margins are well earned. Wholesalers have to airfreight currency in and out of the country under guard, and they run a secure distribution network in the UK. While Barclays receives one-third of its requirements from foreign tourists exchanging money in the UK, only 30-40 per cent of that is in clean enough condition to be reused.

Coles adds that commissions and other charges cover overhead costs at the branches.

But he concedes that the cost of foreign exchange services will drop as competition intensifies.

The market is certainly gathering momentum, with the Post Office the latest to throw its hat into the foreign exchange ring. The service is cheap, with 1 per cent commission and a pounds 2.50 minimum charge for both currency and traveller's cheques.

Its main advantage is its coverage: Post Office Counters has 19,000 outlets for foreign business, forming a retail network bigger than all the bank and building society outlets in Britain put together. Post Office Counters now aims to build on this base by developing a one-stop travel shop. It already provides travel insurance, passport applications and E111 health insurance forms, and later this year it will introduce instant international money transfers through the Western Union. Post Office Counters may even open travel agencies selling airline tickets, and could sell package tours in a number of its branches.

Citibank, meanwhile, has just launched an international package aimed at the well-heeled frequent traveller who has pounds 2,000 or more to open an account. Customers are offered charge-free foreign exchange transactions, accounts in all the major currencies, and in some cases telephone banking in the most popular languages.

Charge-free currency and traveller's cheques are also available to holders of the Alliance and Leicester's Atlantic Visa card. The only cost is pounds 3.50 to cover guaranteed next-day delivery by registered post.

Midland Bank is offering commission-free foreign currency and Thomas Cook traveller's cheques to student account holders.

Barclays has decided to waive commission charges for the first pounds 500 of traveller's cheques ordered with the Barclays Premier Visa card. These can be ordered over the telephone.

Generally, the more competition in the area where you buy your money, the better prices will be. Last-moment purchases, especially at the Channel ports, can cost more.

Travelex has a buy-back scheme which guarantees to change up to 30 per cent of the original transaction value back to sterling. It does this commission-free at the rate of purchase.

NatWest makes no charge, other than the bid-offer spread, to change back currency. Halifax asks for pounds 1 to buy back up to pounds 20, and pounds 4 for sums over that amount. Thomas Cook charges pounds 1.75 for currency up to pounds 20.

Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence