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.