We’ve all been there. We leave it to the last minute, look up at the airport bureau screen confused, not knowing whether we are being fleeced or not with our hard-earned travel money. Ultimately, we decide the kind 0% commission slogan must mean a good deal and we make the transaction. Sound familiar?
Unfortunately, UK holidaymakers need to keep a close eye on this “marketing guff” otherwise you could pay through the nose when exchanging currency. However, rest assured, a good deal is out there.
We have called on the help of Daniel Abrahams, travel money expert at award-winning comparison site MyTravelMoney.co.uk to help us understand a little more about the myth of 0% commission, and how to get the best value currency deals. Here are Dan’s top takeaways:
Everyone offers 0% commission, it’s not so special
Always remember that travel money companies make money in two ways: the fixed transaction cost and secondly profit built into the exchange rate. Almost all will offer to waive the fixed transaction cost and offer 0% commission. It’s not such a “kind” gesture by currency suppliers. In a part-devious part-calculated sort of way, suppliers hone in on 0% commission because, in reality, the biggest profit is made within the rate of exchange. Don’t fall into the trap and let 0% commission guide your purchase!
The “hidden” and most important fee is within the rate of exchange
Treat the exchange rate as the second and most important cost that exists within a travel money purchase. Think of it as the “hidden fee”. As such, focus solely on the rate being offered. A good travel money deal should be between 2 and 4 per cent away from the real, “mid-market” exchange rate. Typically, the most competitive deals will be found online. Obtaining multiple quotes will often pay, try not to settle for the first deal you stumble across.
Do your homework on the “real” rate of exchange
Try to be clued up as much as possible on the real mid-market exchange rate. This can be found in the business section of newspapers and on any major finance site. By knowing the real “mid-market” rate, you can really easily work out the cost of your purchase. It’s merely the difference between the real market rate and the tourist exchange rate you are being offered. Naturally, the closer to the mid-market rate the better.
Airport bureaus are expensive
Airport bureaus are extremely expensive. Our weekly mystery shops show airport bureaus can take a real “commission” of up to 10 per cent of the amount you are purchasing. That’s potentially a cost of £50 on every £500 you purchase, washed away within the rate of exchange. Airport currency suppliers need to contend with super-high rents, and must factor this into their pricing. Secondly, they will know this is a “last-minute purchase” and again, price accordingly.
As a pro tip, if you do want to use an airport supplier, book online and reserve for collection. It’s a very efficient service and will save you 5-8 per cent of the total value of your currency purchase
Haggle away and call in direct
Not many people take advantage of this, but some good old-fashioned haggling can often go a long way. If you leave it to the last minute, never be afraid to tell the airport cashier you are not happy with the rate offered. More often than not, they will fight hard to win your business. It takes courage, but it pays off!
Another pro tip we learnt recently is the ability to call in to the cashier direct and request a preferential rate. Do a quick Google search to find out which currency suppliers are based at your departure terminal. Call them direct, leave your name and normally they’ll offer to match their online rates, which are far superior.
Above all, have an amazing holiday! Being a little bit more frugal with your travel money could certainly pay for another sangria or two in the sunshine!
Daniel Abrahams is the co-founder of MyTravelMoney.co.uk – the UK’s leading travel money price-comparison website. The custom-built technology allows customers to compare live travel money prices from the major regulated players.
(The featured image of the piggy bank is by www.seniorliving.org)