If you’re often dashing overseas to source products, oversee manufacturing or conduct business, it’s worth knowing how to save money when you’re buying foreign currency.
Cash is still the most accepted form of payment no matter where you are, or what you’re buying. Despite the risk of losing it or having it stolen, all smart travellers still take money with them, even if it’s only to supplement purchases that can’t be done on credit card.
But buying foreign currency from the wrong place could cost you as much as a lunch at a good restaurant. Unwary travellers can end up paying more than $100 extra if they swap Australian dollars for overseas currency at the airport. On the other hand, careful selection of where to purchase your dollars, pounds, Euros or yen can put some money back into your pocket for an overseas shopping spree.
In a survey of over a dozen foreign currency exchange outlets, from banks to money change stores, Australian Business Traveller found that where you bought really affected how much you paid. When buying £500, the cost in Aussie dollars ranged from $848 (at Flight Centre Money Centre) to $958 (using the Travelex change booth at Sydney International Airport). That’s a solid $110 difference.
That said, if you can present Travelex with evidence of a competitor’s cheaper rate, it is usually prepared to reduce its commissions. It’s all about doing your research and buying ahead. Ironically, while an airport’s Travelex desk is perhaps the last place you’d want to buy overseas currency, ordering your currency online through the Travelex website is one of Australia’s cheapest currency exchange options. By ordering your money three working days in advance of your trip and paying for it via BPAY (straight from your online bank account to Travelex) you get a better exchange rate and avoid commission fees entirely. Using this method, you could buy £500 for $854, just over $100 cheaper than using the Travelex convenience booths at the airport.
Flight Centre Travel Money outlets generally offer the best exchange rates and also charge no fees or commission charges if you pay with cash or EFTPOS. But that’s one more errand to run and one more queue to join compared to the convenience of ordering your money online, as long as you do it sufficiently ahead of time to escape the commission by using BPAY.
The worst value currency exchange outlets surveyed were the Travelex booths at the airport and kiosks in shopping centres. Currency exchange bureaus make their money in two ways; by offering an exchange rate that’s a few cents worse than the official inter-bank exchange rate, and by charging a per-transaction commission, either a set amount, or a percentage of the amount you’re changing, whichever is greater. In the end, although the exchange rates from currency stores to banks and credit unions may be just one or two cents apart (if that), the commission makes the biggest difference.
The number of factors that feed in to the overall price make it very difficult to assess which outlet offers the best value on any one day, so the best thing to do is to ignore their price structure entirely and simply ask for a quote on changing the amount of money you want to take with you. You’ll then get a bottom line figure that you can compare between outlets.
This article originally appeared in Giftrap magazine, the Australian Gift and Homeware Association’s member magazine.