difference in exchange rates from on line

cshorters_2

On saturday I decided to order my foreign currency euro and croatian kuna, i ordered the euros online with thomas cook and attempted to do the same with the croatian kuna. I was unable to reserve as i needed to ring the store to check for stock. I tried to call but no answer so decided i would ask when i went to coolect my euros.

this i did and she ordered them for me and i had to collect today. Well i can only decribe my feeling as cross and extremely angry as on saturday and today the rate was 8.26 and they have exchanged at 7.82! and although it is not a huge amount in the great scheme of things i think it is around £12 but it is the principle of it. Is there anything I can do about this?

zerog

Don't understand why anyone would go to Thomas Cook for foreign currency.. or anything at all

Doshwaster

Thomas Cook are a business and they need to make a profit. I don't suppose a typical High Street shop has much of a demand for Croatian currency so buying there isn't going to get you a good deal.

You would have been better off waiting until you got to Croatia and sticking your debit card into the first ATM you saw. Even with card fees you'd almost certainly do better than from Thomas Cook.

zagfles

zerog wrote: »

Don't understand why anyone would go to Thomas Cook for foreign currency.. or anything at all

Or most anywhere else, don't understand why anyone would exchange cash in the UK. The VISA rate for the Kuna on 18 June was 8.754498 !!! So over a 10% charge to exchange cash!

NFH

Do not change cash between currencies; instead use cards for purchases and cash withdrawals. An electronic form of payment is inherently cheaper than changing banknotes because extraterritorial cash is expensive to handle. When you use a card, Visa or MasterCard obtains a wholesale interbank rate and no money crosses borders. GBP is paid between UK bank accounts and the foreign currency is paid between bank accounts within the foreign country. When you change cash, either in the UK or abroad, one currency will always be extraterritorial, i.e. outside its home country. If you change cash in the UK, the foreign cash will be extraterritorial, or if you change your cash abroad, the GBP will be extraterritorial. Physical cash is inherently expensive to handle, extraterritorial cash even more so.

In the wholesale banknote trading markets, cash is consequently traded at a premium or discount compared to electronic funds, and the premium or discount depends on several factors. For example the physical state of the banknotes is relevant; in Russia and other parts of Eastern Europe a pristine state is expected. The denomination is also relevant because smaller denominations are more expensive to transport. Another factor affecting some currencies is the issuer of a banknote; for example there are multiple issuers of GBP and HKD banknotes, and Scottish banknotes have a lower wholesale value than Bank of England banknotes. Added to these wholesale costs are the retail costs incurred by bureaux de change, such as employing staff, operating premises in high footfall locations and the potential movement of the wholesale interbank rate while a bureau de change holds the cash. Forget taking cash between countries unless you want to pay unnecessarily for these many costs through a worse exchange rate.

Although Visa and MasterCard obtain a wholesale interbank rate, many UK card issuers subsequently add a percentage fee (often up to 3%) for non-GBP transactions. Given that the card issuer does not partake in the foreign exchange element of the transaction, any such fee is not for foreign exchange but a fee for nothing, feasible because many consumers are less sensitive to or observant of fees when the transaction currency and billing currency are different. You can avoid such fees by using one of the top cards for overseas spending, e.g. Halifax Clarity.

Doshwaster

The trouble is that people have been told for years to "change your money before you go" and most holidaymakers have got into the habit of doing that. However, the companies that make a lot of money out of this service (Thomas Cook, Post Office etc) aren't going to tell people that it is a waste of money doing so.

I don't think I have physically changed cash in the UK (or anywhere else for that matter) in years.

pompeyrich

I think people worry that a card may be retained by a foreign ATM or possibly lost/stolen. That's fine if you have alternative options.

My 21 y/o lad only has the one debit card, he has a credit card too but most of his credit limit will be held by the car hire company deposit. So he is going to take "good old cash" so as not to have all his eggs in one basket.

Doshwaster

pompeyrich wrote: »

My 21 y/o lad only has the one debit card, he has a credit card too but most of his credit limit will be held by the car hire company deposit. So he is going to take "good old cash" so as not to have all his eggs in one basket.

Another advantage of "good old cash" when you are young is that it makes budgeting easier. Put all of your spending on a card and it's all too easy to lose track of where it is all going.

zerog

Doshwaster wrote: »

Another advantage of "good old cash" when you are young is that it makes budgeting easier. Put all of your spending on a card and it's all too easy to lose track of where it is all going.

Well, only if you find it easier to count your cash every day instead of just writing down everything you've spent.

I concede that ATM withdrawals are the best way for someone who lives outside London and who doesn't have the resources to stockpile multiple currencies at home or in a multi-currency bank account (i.e. most people), and anyone going to a small country whose currency is not in high demand. As for me, I'll never pay more than 80p for 1 euro in the next 10 years. Bought my euros at 75p equivalent so currently doing better than any savings.

NFH

pompeyrich wrote: »

I think people worry that a card may be retained by a foreign ATM or possibly lost/stolen. That's fine if you have alternative options.

The alternative option is just to take some £50 notes as a backup. For example, I always have a €100 note in my wallet for emergencies as it hardly takes up any space. I used to carry a €500 note but I had to use it when a Greek restaurant didn't accept credit cards (for a €30 bill).

pompeyrich

NFH wrote: »

The alternative option is just to take some £50 notes as a backup. For example, I always have a €100 note in my wallet for emergencies as it hardly takes up any space. I used to carry a €500 note but I had to use it when a Greek restaurant didn't accept credit cards (for a €30 bill).

How much back up would the lad need for 2 weeks in Florida though? With hindsight it may have been better for him to have loaded prepaid card but still would have been at tourist rates here. I was initially making the point that some people don't have multiple cards and that's why some still use the High Street to change some cash.