This is very much a loaded question, as questions of this nature often are – the reality is that there are a number of things that influence the answer to where the best place for currency exchange is in the UK. You need to consider how much money you need to exchange, which direction the exchange is going in, how quickly you need it in your hands and what your intention is.
Are you exchanging currency for your own use while abroad? Are you exchanging it to send to a loved one? Also, how much currency you plan to convert is going to have a lot to do with what your best choice will be.
The big question is: what are the options? Let’s take a look at them now.
The Traditional Banking System
This is a good choice for currency exchange and the default choice for most people, but it is possible to get much better rates elsewhere. One of the reasons that people tend to favour the banks over some of the smaller currency exchange houses is that they are often more transparent with their rates. The downside is that they are also less flexible and tend not to take advantage of the extremely regular fluctuations that the foreign exchange markets are famous for. They tend to set their rates on a daily basis and that means the rates are appropriately padded to cover the institution in the event of a sudden change in the rate.
One thing to consider, especially if you’re dealing with large volumes of money, is that it may be worth approaching a bank and opening a foreign currency account in which you can leave the funds in their original currency incase a more beneficial rate should come up. Be aware that this is not without risks, as currency fluctuations go in both directions.
Smaller Exchange Houses
If you’re looking to get a quick exchange of a few hundred quid done then these guys will often give you a better rate than the banks, on the surface. However, be sure to ask questions and check the rates they are quoting against the actual rates that are currently in the market – this information can easily be found on Google. When it comes to “fee free” offers in the currency conversion market, it always pays to be prudent and do your research as this is rarely the case – often hidden fees are tacked on without your knowledge. How valuable “fee free” really is to you depends primarily on how much you’re exchanging.
Any operator providing such a service will have loaded their rates so that their profit is absorbed into the transaction. For a smaller currency exchange this is actually to your benefit, if you’re changing a decent amount of money though what you’re looking for is the lowest exchange rate – this often comes with a fixed fee which still leaves you ahead.
If your intention is to send money abroad for someone else, or you’re transferring your own funds overseas as you’re about to relocate, you’ll find yourself needing to utilise an international transfer. Gone are the days when money orders and telegraphic transfers were your only option but, depending on the value of the transaction, you may want to exercise due caution.
The issue with relying on a third party to manage your currency conversion and transfer is that you are letting the funds out of your control. Smaller remittance services that are “registered” with the Financial Conduct Authority are not required to separate their own funds from those of their clients at the end of the business day. Any operator that is transacting amounts in excess of 3 million Euro per month must be authorised by the FCA – these companies are required to engage in a daily separation of funds (known as ringfencing) which adds a layer of security should something go wrong with the remittance company.
Another option is online transfer services, such as OrbitRemit. These services are fast, safe and easy with the funds arriving safely in their new jurisdiction sometimes as quickly as one day after the transaction is finalised in the UK. The lack of bricks and mortar, and the associated overheads, also means that they are quite often the more cost effective choice.
Currency exchange is confusing and, especially if you are doing it regularly or transacting large amounts, it is well worth doing your research and getting it right. In this post we’ve covered a few of your options, as always, be careful.