Beware the myth of ‘commission free’ exchange rates

Beware the myth of 'commission free' exchange rates

British holidaymakers are being misled into believing that a ‘commission free’ exchange means they are getting the best deal for their holiday money.

Online currency provider FairFX said many Brits are unaware that the exchange rate is just as important as the commission fee in determining how much of a foreign currency they’re getting for their pound.

On the high street, consumers can often find themselves paying 3-5% more for foreign currency compared to the real exchange rate, whilst some regional airports charge up to 15% more.

Stephen Heath, FairFX chief executive, said: “People may think they are paying ‘zero per cent commission’, but that couldn’t be further from the truth.

“When it comes to holiday money, people are clearly being swayed by the misleading headline advertising tactics adopted by many providers.”

A survey by FairFX found that many Brits don’t understand what zero commission means.

Thirty seven percent of those polled thought that it meant the provider does not make a profit from the service, whilst 23% thought that the companies do not charge commission, but add on other fees.

Just 16% realised that they are effectively charged for a ‘no commission’ deal via a poor exchange rate.

“People believe they are getting superior pricing because of ‘zero per cent commission’ advertising,” Heath said.

“In reality the lack of transparent charging means consumers can’t see the true cost of the transaction.”

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