How to Save Money on Currency Exchange

Are you heading abroad for work or a holiday and need to get the local currency before you go? Several factors can affect the total cost of a currency exchange, and it’s worth being a little savvy to avoid unnecessary fees. 

In this article, we’ll share all our top tips to help you save money when exchanging your currency.

What affects the cost of a currency exchange?

Many people believe the exchange rate is the only factor that impacts how much you’ll get after a currency transaction. In reality, several different fees and elements contribute to the overall cost. Here’s a breakdown of the key ones:

• The exchange rate: This is the rate applied to your transaction, usually including a margin on top of the real market rate to allow the exchange provider to make a profit.
• Commission fees: Many providers charge an extra commission on top of the exchange rate. This can be a flat fee or a percentage of the amount exchanged.
• Bank charges: When withdrawing money abroad or paying in a foreign currency, banks often apply high fees. The exchange rates they use are generally much less favourable.
• Automatic conversion fees: If you pay in your home currency while abroad (e.g. choosing GBP instead of the local currency at checkout), the transaction often involves a poor exchange rate and added costs. These should be avoided where possible.

Our tips to reduce currency exchange fees

As we’ve seen, fees can vary widely depending on the context, your payment method, and the provider. Follow these practical tips to secure better exchange rates and keep additional charges to a minimum.

Order your currency online

One of the best ways to benefit from preferential exchange rates is to order your currency online. Online exchange services typically have lower overheads than physical branches, allowing them to offer more competitive rates.

Some providers, like ChangeGroup, even offer 0% commission on online orders. By combining a lower exchange rate with no commission, you’ll get more currency for your money.

You can also enjoy additional services, such as home delivery or BuyBack guarantees, which allow you to return unused currency after your trip at the same rate.

Exchange before you travel

It’s highly recommended to exchange your money before leaving the UK to avoid paying a premium when you arrive at your destination. Here’s why:

• Tourist areas and airports tend to apply poor rates, knowing travellers often have no other choice. Having cash before you go saves you from exchanging in a rush or under pressure.
• Foreign card charges can be high. Many card payments abroad come with hidden fees and poor exchange rates, making them an expensive option.
• BuyBack services are only available if you’ve exchanged your currency beforehand, as you’ll have to be able to come back to the original exchange bureau to bring your leftovers.

Avoid currency exchange at the airport

Airport currency exchange kiosks often apply the worst exchange rates, largely due to their high operating costs. They also take advantage of last-minute, unprepared travellers.

Make sure you sort your travel money before leaving, either through home delivery or by collecting from a city centre branch, where rates are generally far more favourable.

Use online tools to compare exchange rates

Exchange rates can vary significantly between providers, making it difficult to know where to go. Thankfully, several comparison websites allow you to check the best available rates across a range of bureaux de change.

You can also consult platforms that show the real interbank rate (the market rate without any added margin). Comparing this with what a provider is offering can give you insight into how much of a markup you’re being charged, helping you identify the best value more easily.

In summary, the key to saving money on currency exchange is planning ahead. Order online, avoid high-traffic areas like airports, compare rates, and look for providers offering 0% commission and favourable exchange rates. A little preparation can go a long way towards stretching your travel budget further.