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 $1,869.16 (at American Express Foreign Exchange or through Travelex Online, paying by BPAY) or as much as $2,111.70 (using the Travelex change booth at Sydney International Airport). That's a whopping $242.54 difference.
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 $1,869.16 -- a staggering $242.54 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|
|AMEX Foreign Exchange||1118.07||1869.16||1552.80|
|Sydney Credit Union||1141.89||1926.01||1593.56|
|Travelex Online (paid via BPAY)||1118.07||1869.16||1552.80|
|Travelex Online (paid via Credit Card)||1128.02||1885.80||1566.62|
|Travelex shopfront store (QVB, Sydney)||1137.00||1930.50||1600.00|
|Travelex Sydney Airport kiosk||1202.34||2111.70||1762.65|
Green = best value, Red = worst value
As you can see, we found that both American Express Foreign Exchange and Travelex Online (BPAY) were the best value outlets across all three currencies in the amounts quoted. Not only are the exchange rates favourable but there are no fees or commission charges if ordering online and paying by BPAY.
The two next-best deals are from Westpac (USD & GBP) and Travelex.com.au paid via credit card.
Australia Post and the remaining big four banks offered quite good value – only about $20-$40 more expensive to buy £1000 than the best value outlet, Travelex Online (BPAY).
By far the worst value currency exchange outlets were 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 cards and credit cards?
Australian Business Traveller compared the best rates on prepaid travel cards and the costs of using credit cards for purchases in a separate article.
For this particular 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 made by credit card.
Foreign exchange costs used in this article included any applicable commission or exchange fees, and were as quoted on April 8 2014.
Additional research by Fraser Orr, David Flynn and Chris Chamberlin.
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