A survey for the Sunday Times carried out just over a week ago showed that obtaining foreign currency in airport departure lounges was the most expensive way to get your holiday cash.
At Travelex Heathrow £500 bought only €556, whereas if booked in advance online and collected at the same airport desk, you would have received €600. The £ to € mid-rate that day was about 1.23, which is equivalent to about €614 for £500. Hence the direct airport purchase charged the equivalent of 9.5% commission, compared with only 2.3% if bought online from TRAVELEX.
Other exchange bureaux at Heathrow charged similarly, but commission rates at other airports were sometimes significantly lower.
The best rate given for online purchase was from MONEYCORP who gave €603.55 for £500, equivalent to only 1.8% commission. This was the best buy in the survey.
On the High Street, the Post Office would have given €580 for £500 (5.5% commission) and Marks & Spencer €590 (3.9% commission). Much better than purchasing at the airport desk, but not as good as buying online and not the ‘no commission’ as indicated at the Post Office. Bear in mind that you will get far worse exchange rates if changing smaller amounts such as £50 or £100.
You will also lose a similar percentage when you change back any excess currency, so don’t get much more than you need, or else keep any excess for your next holiday!
Of course you can’t expect to get the mid-rate on currency exchange as there would be no profit for the exchanger. However with some credit cards you will get more-or-less that mid-rate on overseas purchases (shops, hotels etc.) and often only a small amount of interest on using your card to obtain cash in the country you are visiting, irrespective of the amount being changed. See my Travel Money page for more details.