With Halifax offering customers the option of withdrawing their money in other currencies, we investigate the cheapest ways of buying foreign currency.
If you happen to be a Halifax bank customer that uses its cash machine located in Old Broad Street in the City of London, you may have noticed an interesting new card services option. Machine users can now withdraw their money in euros and US dollars as easily as they can in sterling.
Halifax plans to have further ATMs offering the service in Basingstoke, Windsor, Chester, Dumfries and Southampton by the end of the year.
Withdrawing currency from an ATM
Halifax and Bank of Scotland customers can withdraw currency from these machines without incurring the usual fees or commissions charged when withdrawing cash abroad, which sounds great. Or does it?
Well clearly the option of being able to simply withdraw cash from a "hole in the wall" is an awful lot simpler than having to think about foreign currency exchange. What's more, as Halifax's rate is set by Travelex each day it is quite competitive.
Indeed I gave them a ring to find out what it would cost a Halifax customer to withdraw _500, and US$500 from its multi currency ATM today.
Euros
_500 = £366.22
Exchange rate £1=_1.365
US dollars
$500 = £260.51
Exchange rate £1=$1.919
Although the exchange rates given aren't as competitive as Travelex's rates for online foreign currency exchange (see below) it is still a good rate, and with no commission to pay makes the concept quite interesting.
But this is only the case for Halifax and Bank of Scotland customers. Should a customer of another bank make a withdrawal through the machine they would find they would incur fees similar to those charged when we make cash machine withdrawals abroad as their own bank may add a "foreign usage loading fee" to the transaction.
What's more, as foreign cash machines use an exchange rate set by Visa and MasterCard (which is more competitive than Travelex's) non Halifax/BOS account holders could find that withdrawing currency once abroad is actually cheaper than doing so through a Halifax machine here (even taking into account the loading fees incurred).
So to sum up, for convenience the multi currency cash machine from Halifax is worth considering if you are a Halifax/Bank of Scotland customer, or if you need currency quickly (and happen to be near one). If not, and you have a little more time on your hands, exchanging currency in advance the old fashioned way is likely to be cheaper.
Exchanging Currency before you travel
So, for those that prefer to exchange their sterling for foreign currency before they travel there is a wealth of options. Currency can either be delivered, or collected when you travel at airports, ferry and Eurotunnel terminals and mainline railway stations. It is however usually worth changing up your money in larger amounts as it will usually cost less (or indeed no) commission, and delivery may be free, too.
I did some research to find out the cheapest places I could exchange sterling for euros and US dollars:
How much would I pay in £ to buy one thousand euros (_)?
Company | Exchange rate | Commission | Total cost/£ | Delivery fee |
|---|---|---|---|---|
1.459 | Nil | £709.22 | Collection at branch; delivery £5 | |
1.396 | Nil | £716.54 | Free collection at airports, Eurotunnel and ferry terminals. | |
Marks & Spencer | 1.376 | Nil | £726.74 | Orders of £500 or more delivered for free (£5 charge for orders less than this). |
Saga | 1.369 | Nil | £730.27 | Free delivery if over £300, £4.95 if not. |
American Express FX4YOU | 1.369 | Nil | £730.67 | Free collection at Heathrow and Glasgow airports. |
How much would I pay in £ to buy one thousand US dollars?
Company | Exchange rate | Commission | Total cost/£ | Delivery fee |
|---|---|---|---|---|
1.985 | Nil | £503.78 | Collection at branch; delivery £5 | |
Travelex | 1.970 | Nil | £507.69 | Free collection at airports, Eurotunnel and ferry terminals. |
Saga | 1.961 | Nil | £510.43 | Free delivery if over £300, £4.95 if not. |
Marks & Spencer | 1.939 | Nil | £515.73 | Orders of £500 or more delivered for free (£5 charge for orders less than this). |
American Express FX4YOU | 1.9268 | Nil | £519.00 | Free collection at Heathrow and Glasgow airports. |
As you can see, the winner in each case was Thomas Exchange Global, offering the best exchange rates with no commission. However, note that although currency can be collected for free, it only has branches in London. If that isn't convenient, it offers a postal delivery service for £5.
In second place for each currency is Travelex, which also charges no commission. And as currency can be collected for free the next day from over 40 Travelex locations in airports, ferry terminals and Eurotunnel most of us should be able to use that option.
What's more, as Travelex offers an online price promise (it will refund any difference between its price and any online competitor's) you may find shopping around for the best deal and then buying through Travelex (and informing them of the rate you've been offered) is worth your while.
Card charges
Incidentally, be careful when paying for foreign currency. All credit cards and most Visa debit cards will charge a fee (typically 2%) on the transaction. Debit cards that don't charge include First Direct, HSBC, NatWest, Halifax, Nationwide, RBS and Intelligent Finance. If you don't have one, you could always use good old cash!
And as a final note, Nationwide BS FlexAccount holders should remember that they're in the happy position of being able to use their debit cards to withdraw cash anywhere in the world, for free!
More: Holiday For Less