Until fairly recently, banks and bureau de change services had no competition when it came to customers buying foreign currency. These types of services are still generally found in the high street and at the airport. If you’ve seen them before it’s likely you’ll also have noticed they heavily advertise the fact that they do not charge commission. However, although it appears that they are offering their services free of charge, nothing could be further from the truth.
Whilst they do not charge an upfront fee for their service they instead build their profit into the exchange rate that they offer, effectively hiding their charge from the customer. Let’s face it; the general public are unlikely to know up-to-the-minute mid-market exchange rates and these opportunistic exchange services know that all too well. Not knowing the amount of foreign currency you should expect to receive makes it very hard for customers to work out exactly how much they have paid for their currency exchange.
However, in recent years there has been a dramatic rise in the number of foreign exchange specialists offering similar (usually significantly better) services than the high street banks and bureau de change shops at substantially improved exchange rates. The end result being that the customer benefits from a better service whilst also receiving more foreign currency for their money.
If we take an exchange of £1,000 into euros as an example and an official exchange rate of 1.2000 euros for every pound. You may expect to receive the following:
Airport bureau de change: 1,080 euros
Bank: 1,140 euros
Foreign Exchange Specialist: 1,176 euros
From the above you will see that taking the time to pre-order your foriegn currency would give you an extra 100 euros to spend abroad.