The staggering hidden cost of holiday money transfer
With the holiday season upon us the thought of popping off to a temperature with double digits becomes more and more appealing.
Taking money abroad has been outdated by travellers’ cheques and in turn by credit cards but how much are we really paying for the cost of that convenience?
Travellers’ cheques were sold on the basis of security, the fear of someone taking all your holiday money on day one being sufficient for us all to ignore the extortionate costs involved with the transaction.
Credit cards were seen as an easier alternative, but when I travelled and paid a bill in euros, which via Mastercard was 6.75% more expensive than I imagined it to be, I was, at best, bemused. After calling Mastercard UK and then being palmed off to Mastercard US it appears the credit card company do not charge commission for the transaction, instead they simply alter the currency rate and take a massive percentage.The convenience of a credit card as a payment tool used by millions of people equals millions of pounds lost in poor currency exchange rates.
The problem worsens when your villa or cottage asks for cash only. Both my last holidays abroad insisted on the villa being paid for in cash! And so for the last trip, our two families took €8,000 with us. I looked at all the commission free companies and had a quote for the Euros to get the best currency rates.
Needless to say the banks were only too helpful and told me it wouldn’t cost anything to make the trade and they could do it right there and then. So what do we pay for this simple convenience? Lloyds wanted to charge me £7634.31 for the €8,000. Barclays were £24 more expensive to purchase the Euros and HSBC were nearly £50 more expensive. So much for best currency rates; £50 is more than a few portions of fries.
The post office, however, provided an excellent saving of nearly £212 against the high street banks – and that’s a few bottles of wine with the fries. However the canny holidaymaker keen to move onto a better meal with their savings could buy their currency online via a reputable currency exchange firm. The broker we use to transfer our customers’ money abroad also provide a currency exchange service to buy travel money at the best currency rates.
With Torfx, the cost of buying €8,000 was considerably cheaper – £7380.07, which was £303 cheaper than HSBC and a vast saving of £66 against the cheapest option at the post office. These are colossal savings and it’s easy to see why the banks are making so much. For the very best currency rates I simply called as far advance as I could andthey purchased the best currency rate they could find. So if you are thinking of a holiday abroad, the earlier you purchase the better. £303 is a lot of chips.
So, pre holiday, buy your cash online with Torfx (they were the cheapest FSA authorised and regulated I could find with the best service), be careful using your credit card abroad as there is also a credit card charge via a hidden exchange rate hike, and be really careful taking cash out via your card as there are distinct charges for doing that. If you want to use a credit card abroad, nationwide has no currency exchange rate charges, but if you travel further abroad, the post office credit card has no charges there either, whereas nationwide may have.
Leaving the holiday situation aside, consider the savings to be made by the person emigrating overseas or even repatriating back to the UK. Perhaps you might even be buying a property overseas?
If you transferred £300,000 to start your new life in Australia, you would do it with $449,764 AUD via Torfx but Barclays would leave you with a staggering $433,471, $16,293 less than Torfx, and they charge £25 for the privilege! The other high street banks are no different.(1)
That’s a lot of Kangaroo with your chips.
For advice on transferring money abroad call Worldwide on 0845 230 9876 or e-mail email@example.com.
Source (1) FXCompared