Why 0% Commission On Currency Is a Myth

Posted on 10. Oct, 2013 by in Wealth Essentials

exchange rate commission

Most currency exchange companies do it – they proudly advertise ‘ we offer 0% commission on currency’ in their store windows, online and in their marketing material.  But what does 0% commission really mean when you exchange currency for another currency?

Not such a great deal after all

It sounds like such a great deal doesn’t it?  You exchange your currency at the airport, your local bank or with your travel agent and they don’t even charge you for the service.  You feel smug and like you just got really good service and a deal you could not have got elsewhere.

But wait. Was that really a 0% commission service you just received? Think about it this way.  Would a business looking to make a profit really offer one of its main services or its primary service for nothing?  Or would they find another ingenious way to charge you for the privilege of exchanging your money?  Unfortunately, it is the latter, but many people do not realize this when they use a foreign currency exchange service.

Why 0% commission isn’t always as it seems

Before you go on holiday think about your currency well in advance and when shopping around for currency, don’t be swayed by 0% commission rates.  Look instead at the exchange rates being offered. The devil is in the detail here and it pays to shop around.  What many currency exchange companies do is advertise 0% commission but give you a very poor exchange rate.  The bad travel money deal is concealed within the rate.  Always remember the golden rule: the true cost of a travel money purchase is the difference between ‘’the real rate’’ and ‘’the tourist exchange rate.’’

Ditch the airport bureau

Banks, airport exchange services and many other currency exchange companies used by the public, use this tactic.  The best way to avoid paying more for your currency than you need to is to buy your travel money online.  Comparison sites like MyTravelMoney will scan the web for you to find the best currency exchange deals. You have the ability to compare live rates and book currency for 24 hour next day home delivery.

Always read between the lines when it comes to personal finance

Few things in life are completely free especially when it comes to personal finance and currency exchange is one of them.  Unfortunately, currency is the last great ripoff in finance and one of the only times where you never obviously know the true cost of transaction. If you really want to make your money stretch further whilst abroad, it pays to be a savvy exchanger and to shop around.  Whether you need to exchange currency for a holiday abroad or looking for a cheap money transfer deal, don’t settle for the first deal you stumble across.

Image by Jeff_Werner

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2 Responses to “Why 0% Commission On Currency Is a Myth”

  1. karen

    11. Oct, 2013

    There are some good debit cards around e.g.. 28degrees, that offer 0% commission and other benefits when withdrawing money overseas. Load before you go and draw out in any currency wherever you are, and no need to specify which currencies you plan to withdraw in, which I find very confusing.

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  2. We spent a couple of weeks traveling around Europe this past May and found that the more convenient the means of exchanging cash to your current location, the higher the fees. In other words, plan ahead and use locator services to map out places to exchange money.

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