Just a quick follow up to my post yesterday where I showed that banks charge a financial transaction tax of over 10% when you change euros into pounds or vice versa. It can be even worse. I noted the Travelex buy and sell rates for the 18 different currencies that they were quoting, and calculated the ratio between the two.
For the following national currencies, the ratio is "only" 26-27% : Australia, Canada, China, Denmark, Hong Kong, Japan, New Zealand, Norway, Singapore, Sweden, Switzerland, UK and USA
But, for reasons that remain obscure, if you were stupid enough to want to exchange money from the Czech Republic, Croatia and Egypt, you will get clobbered with a difference of between 30 and 32%.
However, the prize for the most outrageous transaction tax goes to anyone wanting to exchage money from either Saudi Arabia or South Africa - for which Travelex has a difference of over 39%. Thus, if I wanted to buy 100 Saudi Riyals, Travelex would charge me €227.30. But when I change the 1000 Riyals back into euros, I would only get €163.50 back. I would have lost over 28% of the value in just two exchanges - an FTT of 14% on each transaction. Magical!!
It's a good job that Travelex UK "is committed to matching the best possible overall price in the UK on your travel money purchase". It would be horrible to imagine that they were not being scrupulously fair and reasonable.
It's funny that banks don't seem to make a big thing about these ratios. Difficult to find them published anywhere - although you can find the rates used by NatWest here - theirs have a differential between buy and sell of only 14-15% for the major currencies, but they go up to 31% for money from Peru and Costa Rica.
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