Which?: how your postcode can hit your holiday money

New research from Which? reveals that where you live can determine what exchange rate you get on your holiday cash.

Some people are missing out on the best currency exchange rates just because of where they live. That’s the findings of a new study by consumer watchdog Which?

Which? examined in-store rates for exchanging a £500 sum in ten locations across the country, on the same day in March this year.

The ten locations used for the comparison test included Birmingham, Croydon, Glasgow, Haverfordwest, Leeds, central London, Manchester, Norwich, Sheffield and Southampton, with the investigators checking out branches of the Post Office, Thomas Cook, Marks & Spencer, Sainsbury’s, Asda and Tesco.

There were plenty of regional variations across the stores. So who were the worst offenders?

The Post Office

Surprisingly one of the main culprits was the UK’s biggest high street foreign currency supplier, the Post Office.

In Post Office branches in London and Glasgow £500 bought €578.50. But in Manchester, Norwich and Southampton the £500 holiday fund only turned into €574.85 -  €3.65 less than if you were a holidaymaker from the capital or Scotland.

The worst exchange from a Post Office branch was of €565, in Birmingham, Haverfordwest and Sheffield. That's a €13.50 difference, enough to get you a pizza in Berlin or a drink in Spain!

Thomas Cook

Another big disappointment was popular travel agency Thomas Cook, which was the worst offender for shortchanging its customers.

The branch where you could get the most euros for your pound was Sheffield, with a total of €585.

But if you were a getting ready for a trip and living in Glasgow, Leeds, Haverfordwest or Croydon, the best you could get from the same company was €583. Things got worse if you happened to be in Birmingham or Southampton, with a return of just €580.

Meanwhile, if you were visiting in London you'd have got just €575.80, dropping to €575 in Norwich and a pathetic €553.80 in Manchester.

The difference between the Sheffield and Manchester exchange is just over €30 which is £25 – potentially enough to cover a taxi ride or a meal on your first night.

Why is there a postcode lottery?

So why is there such a massive postcode lottery for holiday goers?

A representative at Thomas Cook told us that in order to offer the best rates, the in-store foreign exchange bureaux are able to offer local rates that compete with other high street currency providers.

But a spokesperson for Which? insists currency companies need to keep their rates consistent for consumers, so that everyone gets a fair deal.

Holiday friends

Although some of the big names fared badly, Marks & Spencer came up smelling like roses with no rate difference across its branches.

Sainsbury’s, Asda and Tesco also had no significant difference that would affect a holiday maker and their spending money. 

Online

Buying in branch is convenient, but it means you might miss out on the best rates going.

Which? also analysed the rate of 22 currency providers online. ICICI came out top of the table with an average exchange of €587.15 over a period of eight weeks. The worst was HSBC where you could only order an average of €562.78 for £500 online.

However, holidaymakers should be careful when ordering currency on the web as unlike other financial transactions currency exchange is not regulated by the Financial Services Authority (FSA) or covered by the Financial Services Compensation Scheme (FSCS) .

More on currency:

Foreign currency exchange: don't get ripped off on your holiday money

Six ways to cut your holiday costs in 2012

How to survive the eurozone meltdown