The great currency rip-off
Australians are losing millions each year in exchange fees.
The Australian Competition and Consumer Commission (ACCC) is urging Australians to shop around when converting foreign currency as it may save them hundreds of dollars.
The Foreign Currency Conversion Services Inquiry (FCCSI) found more than $40 billion worth of foreign currency transactions took place in Australia each year.
The inquiry revealed Australian consumers relied heavily on the big four banks for currency conversion and often paid rates 30% higher than those for the same service around the globe.
The ACCC found Australian consumers could have saved $150 million in 2017-18 had they shopped around and used smaller international transfer agencies as opposed to the big four banks.
The airport was one of the most expensive places for consumers to exchange currencies.
In one case study from the FCCSI, Australians could have saved $40 in February 2019 had they purchased $200USD at a non-airport location.
RACQ Financial Advocacy Analyst Nathanael Watts said the key to finding the best deal was to shop around and determine the best form of currency for you.
“There is not one single option that is going to be the best for everyone,” Mr Watts said.
“Travellers need to consider the country they’re going to as they may not accept certain forms of payment.
“Some countries may prefer cash and, if all your money is on a card, it won’t benefit you.”
Mr Watts said travellers also need to consider the security of their money.
“If you’re in a country that prefers cash, think about how you will keep that cash secure,” Mr Watts said.
“Will you withdraw money from ATMs and, if you do, what limit will you set yourself as you may face transaction fees?”
Tips from the ACCC for converting currency:
- Shop around – brand loyalty can cost you.
- Not all comparison websites are independent.
- Compare the total cost, not just the fees and exchange rate.
- Consider where you buy as pre-purchasing currencies online can be a cheaper option.
- Avoid exchanging currencies at the airport.
- Try to find credit and debit cards without international transaction fees.
- Paying in Australian dollars on your credit card (Dynamic Currency Conversion) is usually more expensive than using the local currency.
- Check to see if your travel money card locks in exchange rates ahead of time.
For more information on unexpected travel costs, click here.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person’s particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.