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Where to Exchange Currency

There are a number of places you can go to exchange currency but depending upon the purpose of your transfer, some will be more appropriate than others. This guide highlights the options and discussed the pros and cons associated with each.

Currency Bureau

A Bureaux De Exchange is a point of sale retail unit that offers foreign exchange services. They tend to be found in places like airports and popular tourist attractions and allow for people to conveniently exchange currencies. Although Bureaus are extremely convenient, they are also very expensive. Think of them as your local mini mart where you pay an extra 30% to buy a loaf of bread than if you were to go to a large supermarket. If you have enough time to make your currency purchase, it might be worth your while considering other options.

Banks

Most retail banks offer foreign exchange services and many people use them as they are considered to be trustworthy and are also incredibly convenient. It must be pointed out though that they are also a very expensive option for exchanging currency. A bank will normally charge its clients a fee (in the case of a bulk transfer) and will also (more importantly) make a sizeable sum of money on the spread. The spread is the difference between the rate they pay for the currency, and what they pass it on to the customer at. A typical bank will charge a spread of around 5% which on a $100,000 transfer means they profit by $5000.

Currency Brokers

A currency broker, in the vast majority of cases, will be the cheapest way to purchase the currency you require. This is mainly to do with the fact that they tend to not have the brand awareness of a bank nor offer the convenience of offering their services on the high street.

To put the savings on offer to a client who uses a specialised currency broker over their bank, we will use an example of two people looking to transfer 200,000 GBP (Great British Pounds) into USD (US Dollars): John D Nut calls his bank to setup the transfer. His bank quotes him a rate that is 5% over the interbank (market) rate plus a fee of £50. John continues with the transfer and the transaction has basically cost him £10,050. Chris Sheen calls a leading currency broker and requests a quote and is offered a rate 0.8% over the interbank rate with no transfer fee. Chris is very happy with the rate and has essentially been charged £1600, saving himself £8450 in the process.

The above example clearly indicates the savings that can be achieved by weighing up the different options. If you are considering using the services of a specialist then you might want to read our guide to choosing a foreign exchange broker.

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