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How to get the best deal on currency exchange
Spending overseas can be a painful affair once the banks apply their exchange rate and banking charges. If you are using debit cards, it is not uncommon for a fixed fee to apply plus a percentage charge which soon adds up.
You can of course use money exchange facilities but this also attracts charges and means you carrying around large sums of money. Call me the queen but I’m not a fan of carrying cash, be it abroad or at home, so this simply doesn’t work for me. Plus, of course, I want every penny I spend to contribute to my airmile balance so I really want to use my credit cards.
So what are my options and how do they each compare?
Here’s a comparison using my recent trip Bahrain as an example as I had the opportunity to do some real-time comparisons whilst I was there and put an exciting new spending option, the Supercard, to the test.
So let’s see how it fares against other currency exchange options.
Overseas spending options
Travelex Pre-paid currency card
It is possible to buy a pre-paid currency card before your trip so you can keep track of your spending. This is only possible for certain currencies and unfortunately one of them is not the Bahraini Dinar. In my example, I would have to buy in Sterling and then apply the exchange rate applicable for each transaction.
Whilst the card applies no overseas payment fees or cash withdrawal fees, it does add a 5.75% fee to the MasterCard exchange rate when converting costs which makes it particularly pricey. The only real benefit I can see of this option is that you have some protection against monies being lost or stolen.
Exchanging money at the airport
This is inevitably going to be the worst deal of all your options for getting your hands on real cash, whether you happen to buy in the UK or at the end destination.
The rate quoted at Manchester airport for Bahrain Dinar on 25/8/16 was 0.4372. This means £500 would buy only 215 Dinar. That’s quite a difference when you see what you can obtain online.
Exchanging money online
Purchasing currency online is definitely better value than buying at the airport, or even in a high street travel agency but it still isn’t your best option. Here’s some example rates for you to see for yourself.
| Company | GBP Cost | Bahrani Dinar | Exchange Rate |
| Post Office | £500 | 240 | 0.4687 |
| Travel Money | £500 | 241.86 | 0.489 |
| Natwest | £507.94 | 240 | 0.472 |
| HSBC | £518.48 | 240 | 0.4628 |
| Tesco | £517.46 | 240 | 0.4638 |
All figures correct as at 22/8/16
None of these rates comes close to the MasterCard or Visa Exchange rate making them a less attractive option. Plus if you change tons of cash and have the money stolen (or lose it), your money is gone forever. Your only recourse is your travel insurance.
Using debit cards abroad
Taking Santander as an example the following charges apply if you use a debit card abroad for purchase
- AÂ non-sterling transaction fee of 2.75% of the value
- Plus a non-sterling purchase fee of £1.25 for each transaction
Wow! If you were to spend £500 you would incur fees of £13.75 plus £1.25 so a total of 3% on that transaction. Obviously the percentage will reduce slightly due to the £1.25 being fixed but I find it pretty annoying being charged £1.25 for every transaction in ADDITION to 2.75%.
It’s even worse if you choose to take money out of your account at the ATM with a:
- Non-sterling transaction fee of 2.75% of the value
- plus a non-sterling cash fee of 1.5% of the value (at least £1.99) being applied
A £500 withdrawal now costs £21.25. Those banks sure know how to catch us unawares. Of course, you also have to factor in the exchange rate which is the daily Visa exchange rate. Admittedly this is slightly higher than what you get if you order money online but of course in that scenario all the charges are factored into the exchange rate given.
| Currency Option based on transaction value of £500 | Fixed Fees | % Fee | Exchange Rate | Total costs | Fees as % of amount |
| ATM Withdrawal (Santander example) | £7.50 | 2.75% | 0.4957 | £21.25 | 4.25% |
| Debit card purchase | £1.25 | 2.75% | 0.4957 | £15.00 | 3% |
Using credit cards abroad
Some cards offer no fees as part of their sales pitch (such as Halifax Clarity) so if you intend to travel frequently these cards may be a good option for you. However they still apply their own exchange rate so you will need to check out how this is calculated. The Halifax card uses the MasterCard exchange rate, the same rate used by Supercard for instance.
If like me, you want to collect airmiles, I have yet to find a card that offers no fees and airmiles combined for mere mortals so usually you have to compromise on something.
Using credit cards abroad can result in expensive fees being applied so here’s some example fees using the Virgin credit card, use of which earns me Virgin Flying Miles. The same fees apply to the Lufthansa Miles and More credit card too.
| Credit Card Option based on transaction value of £500 | Currency Option | Fixed Fees | % Fee | Exchange Rate | Total costs | Fees as % of amount |
| Virgin Atlantic MBNA Credit Card | ATM Withdrawal | £5.00 | 2.99% | 0.4957 | £19.95 | 3.99% |
| Virgin Atlantic MBNA Credit Card | Debit card purchase | N/A | 2.99% | 0.4957 | £14.95 | 2.99% |
The same rates apply for the Lufthansa Miles and More Credit card but you should check the exact charges for your possible cards.
The new kid on the block
So back to the new kid on the block, the Supercard which I have just started using which so far is looking promising.
The premise behind the card is that wherever you make your transaction, it treats it as though it is made in the UK meaning no international fees. In addition it uses the MasterCard exchange rate.
It links your existing cards to the account so that it is the relevant card that gets debited meaning you still earn those oh so valuable points but without having to suffer the rip off fees.
In the example above, I can link both my Virgin and Miles and More cards to the Supercard, pay using the Supercard thus avoiding the charges shown in the table and still earn those all important miles.
The table below shows you how it compares with the other options.
Comparing exchange rates and fees
| Option for obtaining £500 of value | Fixed Fees | % Fee | Exchange Rate | Total costs | Fees as % of amount |
|  Santander cash withdrawal | £7.50 | 2.75% | 0.4957 | £21.25 | 4.25% |
|  Santander debit card purchase | £1.25 | 2.75% | 0.4957 | £15.00 | 3% |
| Virgin Atlantic MBNA Credit Card cash withdrawal | £5.00 | 2.99% | 0.4957 | £19.95 | 3.99% |
| Virgin Atlantic MBNA Credit Card purchase | N/A | 2.99% | 0.4957 | £14.95 | 2.99% |
| Supercard ATM Withdrawal | N/A | 2.99% |  0.4960 |  £14.95 | 2.99% |
| Supercard purchase | N/A | N/A | 0.4960 | Nil | 0.00% |
| Travelex Pre-paid currency card cash withdrawal or purchase | N/A | 5.75% | 0.4960 | £28.75 | 5.75% |
Looking at all these options, the Supercard offers the best exchange rate and the lowest charges. WINNER!
So how much did I save?
So here is what I saved on my Bahrain trip.
| Transaction Date | Description | BHD | Exchange Rate | Amount | Saving |
| 25/08/16 | Regency Hotel | 30 | 0.4961 | £60.47 | £2.10 |
| 26/08/16 | Downtown Rotana | 50 | 0.4961 | £100.78 | £3.26 |
|  26/08/16 | Regency Hotel | 25.047 | 0.4988 | £50.21 | £1.81 |
|  27/08/16 | Starbucks | 6 | 0.4988 | £12.03 | £0.71 |
| 28/08/16 | New York Coffee | 7.2 | 0.4955 | £14.53 | £0.78 |
| 28/08/16 | Starbucks | 6.6 | 0.4955 | £13.32 | £0.74 |
| 28/08/16 | Lanterns Lounge | 31.460 | 0.4959 | £63.44 | £2.19 |
| 29/08/16 | Downtown Rotana | 21.664 | 0.4960 | £43.68 | £1.62 |
| Totals | 177.97 | £358.46 | £13.21 |
The savings are an indicative figure based on the average foreign transaction fees from six leading UK debit or credit card providers.
Turkey costs
Just to further illustrate the potential savings, I used my Miles and More credit card (now attached to the Supercard) on a recent trip to Turkey and here were the charges which applied when I used the card. I have also added in the charge that would have applied had I used the Supercard (annoying!!!) based on the exchange rate applicable on each day.
| Transaction Date | Description | TRL | Exchange Rate | Non sterling Transaction fee | Amount | % Of Total Value as Fees | Exchange rate applicable on the Supercard | Equivalent UK Cost | Saving |
| 11/07/2016 | AYVALIK TOST | 92.00 | 0.2708 | 0.74 | 24.91 | 2.97% | 0.264268 | 24.31 | £1.34 |
| 11/07/2016 | MAKROMARKET-HURMA | 25.25 | 0.2709 | 0.2 | 6.84 | 2.92% | 0.264268 | 6.67 | £0.37 |
| 13/07/2016 | BUDGET MERKEZ | 300.00 | 0.2646 | 2.37 | 79.37 | 2.99% | 0.258542 | 77.56 | £4.18 |
| 13/07/2016 | GLOBAL GIDA TIC TUR LT | 213.85 | 0.2621 | 1.67 | 56.06 | 2.98% | 0.258542 | 55.29 | £2.44 |
| 13/07/2016 | MOTTO CAFE | 84.00 | 0.2621 | 0.65 | 22.02 | 2.95% | 0.258542 | 21.72 | £0.95 |
| 14/07/2016 | HUDSON DERI SELIM CEMA | 70.00 | 0.2617 | 0.54 | 18.32 | 2.95% | 0.255997 | 17.92 | £0.94 |
| 14/07/2016 | MIGROS SARISU LIMAN | 78.61 | 0.2622 | 0.61 | 20.61 | 2.96% | 0.255997 | 20.12 | £1.10 |
| 14/07/2016 | NEYLA CAFE | 55.00 | 0.2618 | 0.43 | 14.4 | 2.99% | 0.255997 | 14.08 | £0.75 |
| 15/07/2016 | BOZKAN AKARYAKIT-3201 | 95.00 | 0.2608 | 0.74 | 24.78 | 2.99% | 0.256813 | 24.40 | £1.12 |
| 15/07/2016 | MOTTO CAFE | 142.00 | 0.2608 | 1.1 | 37.04 | 2.97% | 0.256813 | 36.47 | £1.67 |
| Total Deductions | 9.05 | 304.35 | 298.54 | ||||||
| Total deductions (inc fees) |  |  |  |  | 313.4 |  |  | £298.54 | £14.86 |
As you can see those charges soon add up meaning I paid an extra £14.86 in fees even after I factor in a slightly lower exchange rate on the Supercard.
I also like that the transactions show up nice and clearly on your statement as Supercard – XYZ store. Nothing actually gets charged to the Supercard – the card simply acts as a clearing house for purchases. In effect it’s a little like a financial VPN in that it is indicating to the electronic purchase device that you are in the UK and not some other exotic destination.
In addition the app allows you see exactly what you have saved on each transaction by using the card and is very transparent as it shows the exchange rate used. Here’s an example using one of my transactions.
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It’s not just for use overseas
It is also worthwhile using the Supercard when you are paying for items in the Uk which are not levied in GBP. For instance, I pay for services for this blog in USD and I am charged a non sterling transaction fee for those too. I would be better using the Supercard to make those purchases!
What do you think?
So it’s safe to say that I truly am finding the Supercard super. It is easy to use and saves me money all whilst allowing me to earn my beloved airmiles. Maybe you have tried it, or something similiar in which case I would love to know what your experience has been.
Pin this so you don’t pay more than you need to exchange money overseas:
Note: this is not a sponsored post but a genuine review of my own experience of using the Supercard.Â
I’ve never used a super card but it seems very useful, Anne! Where did you get it?
Ordered online but it has just gone out of service. There is an alternative – the Curve cardwhich you can read about here.
Thanks for this detailed post! Sad to say supercard is not offered in my country. Though i appreciate the information about the currency and bank charges.
I like the idea of the supercard but I’m so lazy and leave everything to the last minute I would forget to use it. I usually just take money from an ATM when I get there!
Supercard seems to be a great option. Unfortunately, It’s not offered in my area, so I’ll just have to stick with exchanging money and my credit card/atm card for emergencies.
I hate that it costs so much money just to have money! I usually go the atm route, but I’ve been known to exchange at the airport in a pinch.
Yep it definitely doesn’t feel cool to see all those transaction charges. I don’t think I have ever changed money at the airport but I have definitely been stung by ATM charges. I have just received a trial Curve card today which is like the supercard I have since discovered and about to put that to the test too.
This post couldn’t have came at a better time for me. I always feel like I am getting majorly ripped off when exchanging money at the airport or online, so this Is a big help. Thanks and hopefully I’ll be able to save on my next trip! 🙂
I sure hope so!
Great post. I usually use my card and I exchange a little bit of cash at the airport. Mostly because usually my exchange rates haven’t been to bad. Just needed enough to get by.
Great post, thanks for the info! It is so hard to know which is best and all these figures and percentages make things way too confusing!! That’s one of the things I hate most about travelling, getting ripped off unnecessarily!
Very thorough. I do so much travel in Europe that I just keep euros. But I’ll take another look for when I am going outside of Europe
A really comprehensive and interesting analysis and comparison. I admit I usually use my debit card while travelling (including for getting some cash – as I discovered that this is the cheapest way for me.
I think it all depends on the card you have. I was doing that and then when I started looking at the individual charges I was pretty horrified. Saying that my husband doesn’t pay transactions fees on his account.
Have you heard of Chase Sapphire credit card? How much purchase $ do you have to have as a minimum every month? Any other restrictions?
Yes everyone is raving about this card but I don’t know the details as it is issued in the UK. I know someone who will though so bear with me and i will ask her.
The new Chase Sapphire Reserve comes with a minimum spend of $4k in the 3 months. Then you’ll earn the 100k point sign up bonus. There are no other monthly spending requirements. Anne, here’s a link to my post on this card if you’d like to share with Carol. http://www.theglobetrottingteacher.com/need-to-know-about-chase-sapphire-reserve/
Thanks Jackie. I knew you’d be able to provide the necessary detail to help Carol.
Oh rats, I just changed money at the airport! Not at an exchange bureau but at the ATM – I always thought that was the best method for travelling but apparently not. So tricky, these things.
To be honest, I always did it that way too until I really started paying attention. My husband can withdraw from the ATM so we tend to use his card now but it pays to check the exchange rates
I really hope they start the Supercard in India soon, it will make my travel life so much easier!! Thanks for sharing the details Anne :).
So do I Suma!
Wow, those are a lot of options. I will definitely be checking out some, including the Travelex cards on my next trip. Thanks for sharing them all.
Great tips. I mostly travel in Africa where it is best to have cash dollars. When I need money I go to ATM, use my debit card and pay 2 eur for cash withdrawal.
I actually wrote an ebook on travel money because it’s all so confusing and can be very expensive. Great job here pointing out so many possibilities for using money. Personally I’m ok now with a few fees as they are simply difficult to avoid completely, but I still think very carefully about what and how I use cash v cards etc.
Can you please send me the link Kerri or pop it in the comments. I’d be interested in that.
These are some really practical tips on optimizing costs when exchanging money. Depending on the currencies, many times one loses a lot of money on exchange margins, service charges etc., This is a good resource to refer to.
Interesting concept, I must check it out! I normally rely on getting money out of ATM’s but absolutely hate the fees. compared to my other options though, they have still been the most economical. The Chase Sapphire with no foreign transaction fees is great too for credit card options. Hope the Supercard comes to the US – would be great!
Check out th Globetrotting Tracher room for tons of advice on that card, it sounds bloody amazinf
I need to check out if we have this kind of thing similar to our country. I would love to have that prepaid card. I am always worried about my credit card bill everytime i leave the country. Thanks.
I didn’t even know you could do a prepaid travel card? Crazy. We used ATMs our first trip and HATED the fees. This time around we are using are Chase Sapphire card and looking to do another card. We will look into the Supercard thanks to you! This was very informative, thanks for sharing.
This one is only open to Uk residents but I suspect there will be set thing similiar available in the US. The Chase Sapphire cards make me green with envy. Such brilliant cards for those wanting to collect airmiles!