Twenty years ago you would have used your High Street bank to buy Pesetas and send them to Spain. The only way you could check the exchange rate was to look at Teletext.
Back then there were a couple of specialist currency brokers but only the brave used them (little regulation). Banks didn’t need to offer good rates as there was no real competition. Nor did they help you to protect yourself against sudden changes in the value of the pound.
Today and you can check the live ‘interbank’ exchange rate on your smartphone and register online with over 200 brokers. Things have moved on and yet many people still use their bank to send euros abroad. It has to be said the banks have had to raise their game but many people are still unaware that exchange rates make such a big difference, especially on large transactions.
The solution is to protect yourself from currency volatility. If you had agreed to buy a house in Spain for 300,000 euros and sent a 10% deposit in April 2017, then sent the balance 3 months later, it would have cost £268,450*. But the pound lost value in that 3 month period so if you had used a forward contract to fix a rate for the 270,000 euro balance back in April, you would have saved £16,350*. That’s a new VW Golf.
Benefits of a broker
Most banks won’t explain all this to private clients – they would if you were a big company.
With so many currency brokers what do you do? Most are very good and, let’s be honest, they are all pretty similar. Some are better at customer service, some have nice websites others seem safer as they have (expensive) bureaux at the airport. We established The Currency Exchange to give you a simple online platform where you can buy euros at your convenience with very very good exchange rates. How? Because we have low overheads and we give you access to the technology of a large London broker.
Written by thecurrencyexchange.com
*Example used GBP:EUR rates: 20 April 1.19, 20 July 1.11