Holidaymakers short-changed by currency rates Some providers' rates vary based on where you live
25 May 2012
While comparing currency exchange rates in-branch and online, Which? discovered examples of regional pricing by the Post Office and Thomas Cook. The gap between the best and worse deals we were offered for £500 was €31.2 at Thomas Cook and €13.5 at the Post Office.
In a single day's 'snapshot' survey, the Post Office offered €578.50 for £500 in London and Glasgow, dropping to €574.85 in its Manchester, Norwich and Southampton branches. The lowest exchange was €565 in Birmingham, Haverfordwest and Sheffield.
Thomas Cook had even bigger differences with the best Euro total, €585, offered in Sheffield. In Glasgow, Leeds, Haverfordwest and Croydon we were offered €583 while Birmingham and Southampton quoted €580; London €575.80; Norwich €575; and Manchester €553.80.
Richard Lloyd, Which? executive director, said: 'While we understand that local competition may play a part in the rates set, it is unfair that people are missing out on the best currency exchange rates just because of where they live.
'Holidays don’t come cheap and these anomalies don’t help hard-pressed consumers. Currency providers need to make sure their rates are consistent to ensure a fair deal for everyone.'
Online rates compared
A longer study monitored the online rates offered on a £500 exchange by 22 currency providers over an eight-week period. We also compared the rates charged by central London branches of Marks and Spencer, the Post Office and Thomas Cook, and high street banks Barclays, Halifax, HSBC, Lloyds TSB and NatWest to see the difference in rates offered online an in-store.
At ICICI, an online provider, we were quoted an average of €587.15 compared to HSBC where the average rate fell to €562.78. That’s a difference of almost 4 per cent, which could leave you as much as £21 worse off on your £500 currency exchange.
Unlike other financial transactions, currency exchange is not regulated by the Financial Services Authority (FSA) or covered by the Financial Services Compensation Scheme (FSCS). This means that if a firm goes bust before supplying your order (as Crown Currency Exchange did in 2010) your money may be at risk. Buying in branch is more secure, but it means you won’t get top rates.
Cards for overseas
Which? also looked at credit, debit and prepaid cards to find which ones provided the best value when used abroad. Overall, the very best credit and debit cards outperformed the best prepaid cards but weren't necessarily available to all. Metro Bank’s debit card topped our list, but as the bank is London based and you need to open an account in-branch, it isn’t much help for those living outside the capital.
Halifax’s Clarity MasterCard was the best widely available credit card, while more well-known names proved to be some of the worst choices for overseas spending. Based on 10 transactions - five purchases of €50 and five €50 cash withdrawals - Barclaycard Platinum Visa, NatWest Platinum and Tesco Bank MasterCard were £30 more expensive than Metro Bank while Endsleigh’s prepaid card cost £43 more. The best pre-paid card was the Travelex Cash Passport Globe.
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