Currency Conversion

BestGuyFriend and his lovely wife are using a credit card with no fees to pay for almost everything during their European trip. Heck, during their visit in London, they didn’t exchange any US Dollars for British Pounds. As not only do you get charged when you exchange but if you are unfortunately left with money before you depart and decide to change back to original currency, you get charged again. Thus, you are losing out twice. So can’t say I really blame them — particularly as the British Pound is but one of five currencies they will encounter during the trip.

Interestingly, the Consumer Focus group published a report today indicating that millions of UK holidaymakers are being ripped off when trying to buy foreign currency or use their credit card. For example, converting £500 to euros can vary from around £10 to more than £30 depending on where you switch the money. That is some hit and all adds up to some serious money.

In fact, the Consumer Focus estimates that charges to customers for exchanging money are around £1 billion per year. That’s nearly 4% of the £27 billion UK travellers spend while holidaying abroad. Thus, they have complained to the Office of Fair Trading (OFT). Now I’m not optimistic that the OFT will be able to do much on this issue as it doesn’t just affect British tourists, but everyone worldwide who travels.

And as with other areas of banking, there is a lot of shady dealings and opportunistic profiteering happening here. There are simply too many hidden fees and complex charging structures and so the average consumer is continually losing out!

So yet another reason why we need to see global banking reform.

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