The biggest foreign currency rip-offs

by lovemoney staff on 03 July 2012  |  13 comments
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If you're off on a foreign holiday any time soon, make sure you keep an eye out for these currency rip-offs...

If you're going abroad on holiday, there are numerous ways in which you can end up being ripped off. We're going to highlight ten of the biggest rip-offs to watch out for.

At the airport

Here at lovemoney.com, we’ve frequently said that airports are one of the worst places to pick up your foreign currency. Airports are only too aware that many travellers will leave grabbing their cash until the last minute, and as a result, they don’t bother to offer a competitive exchange rate. On top of this, in some cases, they also charge a commission fee, meaning that you’ll lose out even more.

However, how much you’ll lose out by can actually vary quite significantly from airport to airport. So make sure you avoid getting your currency from these airports and plan well in advance!

Commission-free

If you spot the sign ‘commission-free’, watch out. Although you might believe you’re getting a good deal, many commission-free outlets actually offer poor exchange rates to make up for this cut in their commission. So once again, you’re likely to find you’ve been ripped off. Plan ahead and shop around to avoid this.

Delivery fees

If you’re ordering foreign currency online, make sure you read the terms and conditions carefully. If you’re having your currency delivered, rather than collecting it instore, there’s a good chance you’ll have to pay a delivery fee. Thomas Cook, for example, charges £4.99 for orders under £500, while M&S charges £5. If you're under the limit, make sure you order your money in enough time to be able to collect it from a branch.

Handling fees

You should also watch out for handling fees. If you pay for your currency with a MasterCard credit card, Thomas Cook will levy a handling fee of 1.5% of the order (a minimum of £4, and a maximum of £15).

What’s more, if you choose to pay by MasterCard, Visa credit card or Visa debit card at Thomas Cook, your card issuer may also apply a cash advance charge – so watch out!

Unfortunately, handling fees also often apply to prepaid currency cards if you’re using a credit card to pay for your foreign currency.

FairFX, for example, charges 2.5% if you pay using a credit card, and Travelex charges 1.5% for paying by MasterCard credit card.

ATM withdrawal fees

Judging exactly how much cash you'll need on holiday can be a bit of a challenge. As a result, you might be contemplating withdrawing money on your debit or credit card while you’re on holiday – but if you do this, you’re likely to get charged an ATM withdrawal fee – usually around £1.50 per withdrawal. Read The best debit cards to use abroad and The best credit cards to use abroad to find out which ones don't. You should also be aware that many credit cards will charge you interest from the minute you withdraw, so you should avoid this at all costs if you can.

Unfortunately, prepaid currency cards don’t always have the solution to this. Although many prepaid currency cards enable you to side-step this fee, others don’t. So if you’re looking for a prepaid currency card to use abroad, make sure you choose carefully. For a full breakdown of prepaid card fees, read The best prepaid cards for spending abroad.  

Foreign transaction fees

Similarly, if you're planning to spend on your credit card while you're abroad, watch out for foreign transaction fees. Many credit card providers charge a foreign transaction fee of around 2.75% every time you use your card to purchase something overseas and this can soon work out to be pretty expensive.

Although some prepaid currency cards will allow you to spend without charging a foreign transaction fee, others won't. And even if your prepaid currency card says it doesn't charge you for ATM withdrawals, you may still be charged a foreign transaction fee every time you take money out.

Registration fees

Sadly, there are also several other sneaky fees to watch out for with prepaid currency cards. While they can be a great way to spend abroad, some have the cheek to actually charge you a registration fee.

For example, FairFX charges £9.95 unless you’re ordering £500 or more. However, lovemoney.com readers can get the card for free here.

Top-up fees

Some prepaid currency cards will also charge you for topping up your funds. For example, the Travelex Cash Passport charges 2% of the amount you load onto the card, even if you do it online.

This is a complete rip-off so make sure you read the terms and conditions carefully before applying.

Inactivity fees

If you are applying for a prepaid currency card, watch out for those that charge you an inactivity fee. Fortunately, few cards will have the audacity to do this, but reading the terms and conditions will ensure you don’t get caught out.

Ryanair's Cash Passport, for example, charges £2.50 a month if you don’t use your card for six months. So shop around carefully.

Redemption fees

If you have loaded some money onto your card but then decide you're not going away for a while, you may have to pay what's called a redemption fee to get your money back. As an example, the Post Office charges a fee of £5 on its Sterling Travel Money Plus card.

This is a classic lovemoney article that has been updated

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