Sky high rip-off rates of foreign currency deals

BRITONS jetting off on their summer holidays are set to lose billions in hidden costs as part of the great foreign exchange rip-off.

Greedy currency firms have declared open season on holidaymakers, stinging them with costly fees and punitive foreign exchange conversion rates at every turn.

Travellers can squander hundreds of pounds because they fail to realise the dangers, according to research from foreign exchange service FairFX. So plan ahead to avoid getting burned even before you reach the beach. UNFAIR EXCHANGE Britons who exchange money at the airport can lose as much as 20 per cent of their cash in inferior currency rates.

FairFX research found the average euro rate across 19 airports was €0.9654 for £1, yet the market rate was €1.1315 at the time, a difference of 15 per cent. Stansted was the worst offender offering just €0.90, a mark-up of almost 20 per cent.

The average traveller takes £1,400 of foreign currency and could save around £175 by using an online service instead.

You get much better rates by ordering online, with home delivery costing just £5, and often waived on orders above £500.

Alternatively, take a credit card with no overseas transaction fees, such as Halifax Clarity, Creation Everyday and Santander Zero, or download mobile phone-based current account Revolut, which lets you spend in 23 currencies with no mark-up on the exchange rate.

Ian Strafford-Taylor, chief executive of FairFX, said act before you go: “Buying currency at the last minute means you are likely to face the worst exchange rates in the country.” DYNAMIC DEFEAT There is no respite when you arrive at your destination, thanks to a trick known as dynamic currency conversion.

This happens when a shop or restaurant asks if you would like to pay in sterling rather than the local currency.

Say yes and the shop or retailer will apply their own exchange rate and fees, which are usually far higher than your card issuer’s charges.

Charges average 7.74 per cent, which would add £7.74 for each £100. If given the option to pay in pounds, always say no. MEAN MACHINE Taking your card overseas and withdrawing money at the ATM is simple, but costly.

You will incur an average nonsterling transaction fee of 2.53 per cent, plus a cash fee of £1.39 per withdrawal, costing £3.92 for every £100 of foreign currency.

For credit cards, the average non-sterling fee is 2.87 per cent plus a cash transaction fee of £2.57, costing a hefty £5.44 per £100. Plus you will start paying interest immediately on cash.

You can also be stung when using bank cards for purchases, with an average non-sterling transaction fee of 2.71 per cent for debit cards, plus 39p per transaction, taking the cost to £3.10 per £100. The charges for credit cards are even higher.

Consider ordering a prepaid currency card, offered by the likes of Caxton, EasyFX, FairFX, ICE and the Post Office. Charges on these cards differ, so again compare carefully. FIND A FRIEND Holidaymakers bring home an average £78 in unused currency per trip, money often left in a drawer or lost over time.

Be wary of poor buy-back rates. Instead, try selling on to a friend, donating to charity or keeping the cash for your next trip.

Strafford-Taylor said many wrongly think that bad currency decisions cost only a couple of pounds here and there. However, the damage can be far greater.

“Fortunately, it is not too late and planning ahead can help you save significantly,” he added.

Nick England, chief executive of EasyFX, recommended taking out a prepaid card and loading up on foreign currency when the pound is stronger, rather than leaving yourself at the mercy of last-minute movements.