How not to deal with foreign currency

I just got back from a week in Norway.

On the way there, at Heathrow, I got some Norwegian Krone and now I’m home, I went to my local currency exchange to turn what I had left back into UK pounds.

Out of interest I looked at the figures for buying and selling — and it wasn’t good news.

At Heathrow, I got 2000 Krone for £232.26.

Just now, I exchanged the 1550 I had left for £122.13.

So, the 450 Krone I’d spent cost me 232.26–122.13 = £110.13.

Now if you Google 450 Krone in pounds, the answer, amazingly, is £38.90.

The ‘service’ offered by both currency exchanges cost me £71.23.

Phew!

And, just because they were sure I was an idiot, they both boasted of being ‘commission-free’ — and, yes, I liked the idea of that!

But the two businesses were not equally expensive:

Google tells me that £1 is 11.57 Norwegian Krone.

So let’s have a look at the exchange rates I got:

At Heathrow (Travelex Foreign Coin Services Ltd), Krone were sold at a rate of 8.8002 to the pound.

At Thomas Exchange Global (on my high street) the rate was 12.691.

So, Travelex at Heathrow was 2.76 per pound different from the Google rate, while Thomas Exchange was only 1.121 different. In other words, Travelex accounted for more than two thirds of the costs of my transactions.

Does that have something to do with the difference between buying and selling? Is it always more expensive to buy foreign currency than to sell it back? I don’t know.

The moral of the story is: don’t get foreign currency at the airport. And preferably, don’t get it at all. You may not need it, and having it will cost you most of it anyway.

It turns out that Travelex has a better offer if you go online:

Online, my 2000 Krone would have only cost £179.85 (instead of £232.26), at a rate of 11.1202 to the pound — closer to the Google rate than either of the in-person services I used.

But I would have had to order early enough for the cash to be delivered to my home and that service would cost £7.49.

Still, not a bad option if you are organised ahead of time.