How to get the best Pound to Euro rates
How to get the best Pound to Euro Rates
Individuals considering either moving or working abroad are faced with the prospect of needing to transfer both small and large quantities of currency from their destination country back to the UK. The three primary options for accomplishing this task are; using High Street exchange services, dealing directly with a bank, or utilising the services of a foreign exchange broker. Each option offers certain advantages that will be more or less appropriate for a given individual’s circumstances. What is important to consider is that these differences can have a significant impact of the relative cost of a currency transaction; over the course of multiple transactions, the cost effects compound, so making such a choice with care is advisable.
1. High Street Currency Exchange Services
The advantage of using the High Street exchange services is that they offer predictable convenience and do not require any pre-existing relationship. One must simply arrive at the establishment, and any amount of currency may be converted from Euros to Pounds quickly. The downside of such services is that they tend to be quite expensive relative to other options, often charging much wider margins than either banks or brokers. Many of these services have minimum exchange fees, so converting at least enough currency to meet the minimum is advisable. Ultimately, these services are a useful resource for individuals who need to exchange smaller sums of currency quickly, and who have failed to plan ahead significantly.
2. Using Banks for Foreign Exchange
The advantage of using a bank to handle your foreign exchange needs is that they tend to be a good middle ground between a High Street exchange service and using a foreign exchange broker. Most banks have a foreign exchange department that allows them to achieve attractive rates and have a solid sense of the market and developing trends. Furthermore, if one selects a larger, international bank, it may be possible to use the same organisation to handle one’s banking needs abroad, one’s banking needs at home, and to handle one’s foreign exchange needs. In most case, the most extensive the relationship one establishes with a bank, the lower the costs one can expect to incur for various services.
The downside of using a bank to address foreign exchange issues is that banks tend to charge higher margins than brokers, and many require an individual to have a banking relationship with the bank in order to receive the most attractive exchange rates. Many banks offer this as a convenience service, choosing to focus on other services instead. They do sufficient volume to receive attractive pricing, but only pass a fraction of this along to their customers.
3. Using a Foreign Exchange Broker
A foreign exchange broker is an expert in helping people who need to exchange money between two or more currencies, which in this case is Pounds to Euros or vice versa. The advantage of using the services of a foreign exchange broker is that they often can secure the most attractive exchange rates for their clients. These brokers are active participants in the foreign exchange market, and as such, can give their clients an edge by sharing insights into the direction that near-term rates are moving. Rather than simply convert one currency into another, as a bank would, a broker may be able to advise a client as to what to expect and how to position oneself to benefit.
The drawback of working with a foreign exchange broker is that unless one is trading a fair amount of size, the minimum commission charged by a broker may impact the benefits. This has become less of an issue as online brokerage has become increasingly common, but one should still be aware of effect of commissions on the rate before opting for this option over the other choices.
Author: Geoff Kennedy