Holiday-makers short-changed by currency providers

New Which? research reveals a postcode lottery on currency exchange rates that could leave some holidaymakers short-changed.

We investigated in-store rates on a £500 exchange in 10 locations* across the country on a single day in March. We found significant regional variation in how many euros we were offered between branches of the same provider, including the UK’s biggest high street foreign currency supplier, the Post Office. In London and Glasgow, we were offered €578.50 for our £500 but this dropped to €574.85 in its Manchester, Norwich and Southampton branches. The lowest exchange was €565 in Birmingham, Haverfordwest and Sheffield.

The rates offered by 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. That’s a difference of just over €30 or £25 – potentially enough to pay for your taxi to or from the airport.

This was not the case for all high-street providers. Marks & Spencer offered the same rates nationwide, while Sainsbury’s rates showed no significant regional variation. There was some variation between branches of Asda and Tesco but this was not common.

We also found big differences in the rates offered by different providers when we carried out a mystery shop of online and central London foreign currency providers over an eight week period, making it vital for consumers to shop around for the best deal.**

At ICICI, an online provider, we were quoted an average of €587.15 compared to HSBC’s online rate where the average 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.

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.”

Which? also looked at credit, debit and prepaid cards to find out which ones provided the best value when used abroad.*** Overall, the very best credit and debit cards performed better than prepaid cards based on 10 transactions – five purchases of €50 and five €50 cash withdrawals – but the best weren’t necessarily available to all.

Metro Bank’s debit card topped our list, costing £416 in total, 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, costing £419 in total, while several well-known names proved to be some of the worst choices for overseas spending. Barclaycard Platinum Visa, NatWest Platinum and Tesco Bank MasterCard were at least £30 more expensive for euro transactions than using Metro Bank’s debit card while Endsleigh’s prepaid card cost £43 more. The best prepaid card – Travelex Cash Passport Globe – cost £423.

Notes to editors:
*Which? researchers visited branches of Post Office, Thomas Cook, M&S, Sainsbury’s, Asda and Tesco in Birmingham, Croydon, Glasgow, Haverfordwest, Leeds, central London, Manchester, Norwich, Sheffield and Southampton on a single day in March.

** In an extended study, we monitored the online rates offered on a £500 exchange for Euros by 22 currency providers over an eight-week period. We also sent researchers once a week to central London branches of Marks & Spencer, the Post Office and Thomas Cook, and high street banks Barclays, Halifax, HSBC, Lloyds and NatWest. For online providers, the cost of home delivery (where charged) was deducted from the total currency obtained.

*** Between January and April 2012 we calculated the total cost (including all charges) of making five purchases of €50 and five €50 cash withdrawals from an ATM abroad using a variety of popular credit, debit and prepaid cards, based on average exchange rates offered over 22 separate days.

If you would like to view the figures ranking foreign currency providers and the best card to take when you travel email

Prepaid cards look like debit or credit cards but you load money onto them as required. They’re separate to your bank account and you can only spend what you’ve preloaded.

Buyer beware: 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.

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