Getting the best exchange rate
The rate you see on internet sites, the television or in newspapers is normally the interbank rate and you won’t usually be able to get this rate unless you’re transacting millions of pounds.
The banks have a standard day rate for smaller transactions, which can be anything from 0.25% to 2% worse than the interbank rate. This is one of the simplest options, although our research suggests it will not be the cheapest. Some banks will insist you go into a branch to fill in paperwork and payment times may not be the quickest.
You should be able to get a better rate by dealing with a foreign currency specialist or broker. The exact rate you receive relative to the interbank rate will depend on the amount you’re transacting, the frequency of your transactions and whether you are booking an immediate transfer or Forward Contract. However, unless your transactions are small (under £1,000) you should normally expect to be no more than 1% from the interbank rate.
There are many brokers out there to choose from, but for additional peace of mind it helps to use a broker that is authorised and regulated by the Financial Services Authority (FSA). A major stipulation of this regulation is to safeguard client funds by segregating client money.
The five biggest brokers in the UK are Travelex, Moneycorp, World First, HiFX and Currencies Direct.
For very small amounts you could also consider using a money transfer service from a company like Western Union. However, these services can attract fraudsters so take extra care before paying someone in this way.
There's lots of other things to remember too - read our helpful list here.
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