I love traveling overseas and exploring new places. I adore London and its culture and find the city charming and exciting. But I will not tolerate their currency exchange booths.
The exchange rate between the American dollar and the British pound may be fairly low right now ($1.69 per pound, down from $2 per pound in recent years), but there are plenty of currency exchange places in London’s West End that are changing money as if the economic downturn were a myth. On a recent trip there I brought $200 in cash with me. Many places in the West End were open late but offered anywhere between $1.85 and $2 per pound. (Or, up to $35 more per £100 than the actual exchange rate.) I finally found a booth that kept bargaining with me until they offered $1.70 per pound, fee included. I agreed as that was the best deal I would get anywhere in the West End.
Why focus on the West End? Because it is tourist central for theater, dining and Piccadilly Circus, the city’s modest cousin to Times Square. Visitors to London often congregate there. I lucked out in my quest for pounds simply because I was willing to walk away. It actually wasn’t a negotiation tactic. I was just annoyed and about to hit up an ATM, even though I really wanted to exchange my cash rather than walk around with an extra $200 on hand. (Given the advice I’m about to give, I normally don’t take that much with me.)
The two best ways I have found to get the lowest exchange rate when traveling abroad are:
1) Take money out of an ATM. Many overseas bank machines will not charge you an ATM fee. Your bank might, but it will probably be between $2 and $3. You’ll be getting the best exchange rate possible with a nominal fee, and it’s a better deal, especially the more money you take out. It also keeps you from having to carry around a load of cash while in transit to your destination country.
2) Use your credit card. Not everyone takes American credit cards in Europe, but a majority of large businesses do, and in a city like London you should be able to use your plastic all over town. Credit cards give you the best exchange rate with no fees.
Ordering foreign money from your local bank prior to your trip will get you the current exchange rate, but my bank was going to charge me between $10 to $15 for required expedited delivery of the currency, and that was certainly not better than the two options listed above, so I declined.
Never change money at airports or hotels because they will gouge you with high fees and a poor exchange rate. Do so only if you’re desperate, and even then try not to exchange a lot.
For more information about currency exchange in general across Europe and other parts of the world, you can refer to my 2008 American Way article “Fair Exchange”. Throughout years of traveling I have learned a lot about what to do and not to do. Emergency cash is usually a good idea, but don’t take more than you need to. You should also know that travelers checks are not as commonly accepted as they used to be. And remember to tell your credit card company that you are going overseas and when so they do not inadvertently decline certain charges.
Economic savvy is power. Check current exchange rates at XE.com before you travel or even while you’re away if you have Internet access. If you choose or need to go an exchange booth, ask how much 100 pounds will cost (fee included), then obviously divide the amount by 100 to get the final per pound cost. Try to negotiate if they seem like they’re willing to bargain.
Traveling overseas is often costly, but there are smart ways to make your dollar stretch farther. Don’t get ripped off.