Heading overseas soon? Buying foreign currency from the wrong place could cost you as much as a dinner for two at a good restaurant.

An investigation by Australian Business Traveller shows that unwary travellers can end up paying more than $200 extra if you swap Australian dollars for overseas currency at the airport's bureau de change desk.

On the other hand, careful selection of where to purchase your US dollars, pounds or Euros can put hundreds back into your pocket for an overseas shopping spree.

We surveyed over a dozen foreign currency exchange outlets and found that when buying £1000, the cost in Aussie dollars could be as little as $1696.65 (at Flight Centre Money Centre) or as much as $1916.00 (using the Travelex change booth at Sydney International Airport). That's a whopping $219.35 difference.

However, that doesn’t mean you should avoid Travelex outright. We found Travelex outlets were quite prepared to reduce their commissions if presented with evidence of a competitor's cheaper rate structure to match.

Despite being the worst value place to get money changed if you just walk up to a counter at the airport, Travelex can also be one of the best if you think ahead and pre-book your money via their website.

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. You can also collect your foreign currency from a Travelex kiosk at the airport on the day you fly, so that's one less errand to run before your trip.

Using this method, you could buy £1000 for $1709.40 -- a staggering $206.60 cheaper than the using the Travelex convenience booths at the airport.

In the table below we've listed the cost of buying $US1000, £1000 and €1000 from a selection of major currency exchange outlets as well as the big four banks and two credit unions, with all rates based on the same day.

This is obviously not a comprehensive coast-to-coast survey of every outlet in Australia – if you think we've missed one that's particularly good value, we'd love if you posted about it in the article comments.

Australia's best – and worst – currency exchange outlets

Outlet	US $1000	UK £1000	Euro €1000
Flight Centre Travel Money, George St, Wynyard (Sydney)	1044.8	1696.65	1435.45
Australian Central Credit Union	1046.79	1704.16	1447.81
Travelex Online (paid via BPAY)	1047.12	1709.40	1461.99
Westpac	1057.87	1713.61	1468.71
American Express Foreign Exchange	1057.87	1713.61	1468.71
ANZ	1058.81	1720.91	1468.88
Bendigo Bank	1045.58	1721.19	1466.53
NAB	1067.77	1722.87	1453.91
Commonwealth Bank	1058.59	1724.14	1479.85
Sydney Credit Union	1071.05	1734.91	1492.54
Travelex Online (paid via Credit Card)	1062.83	1735.04	1483.92
Travelex shopfront store (QVB, Sydney)	1076.25	1807.85	1558.10
Travelex Sydney Airport kiosk	1102.00	1916.00	1612.00

Green = best value, Red = worst value

As you can see, we found that Flight Centre Travel Money was the best value outlet across all three currencies in the amounts quoted. Not only are the exchange rates favourable but there are no fees or commission charges if you pay with cash or EFTPOS.

The two next-best deals are from Australian Central Credit Union and Travelex.com.au paid via BPAY.

The big four banks, and American Express currency exchange, offered quite good value – only about $30 more expensive to buy £1000 than the best value outlet, Flight Centre Travel Money – and there was only a few dollars difference between their quotes for all three currencies.

By far the worst value currency exchange outlet was the Travelex booths at the airport and Travelex kiosks in shopping centres. Clearly, they're charging a high price for the walk-up convenience locations.

Keep in mind that exchange rates change every day, and in the foreign exchange business outlets can vary their fees and commissions at any time -- so be sure to get a quote before buying to compare to the quotes we received.

Deciphering confusing rates and fees

Currency exchange bureaus make 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.

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.

What about prepaid travel credit cards and overseas ATMs?

Australian Business Traveller plans to compare the best rates on prepaid travel cards, and the cost of withdrawing money from your own bank account and using credit cards for purchases overseas in coming articles.

For this article, we wanted to focus on the thing that most travellers still do -- get cash in their wallet to pull out at the airport at the other end. Cash is still the most accepted form of payment no matter where you are, or what you're buying, so despite the risk of losing it or having it stolen, most travellers still take it with them -- even if it's only to supplement purchases that can't be done on credit card.

 

_{Additional research by Fraser Orr and David Flynn.}