PoundSterlingLIVE - The British pound is going for less than one euro at the UK's largest airport as currency shops there charge continue to charge significant spreads.
The pound to euro exchange rate was observed at 0.9480 at 13:40 on August 31 at Heathrow's Terminal 2, at which point the spot interbank rate was trading at 1.1660.
This makes for a remarkable spread on the retail rate being charged across the counter to buyers at Heathrow, but a similar fate is likely to await last-minute buyers of holiday money at all the UK's major airports.
This means those looking to buy £1000 worth of euros would only receive €948, whereas more competitive providers would deliver €1154. (This is based on TravelFX's rate of 1.1540 which was observed at the time).
Pound Sterling Live has regularly been tracking the costs associated with buying money at UK airports and notes the key issue is that only one company can hold the exclusive concession to offer holiday money sales at UK airports.
This means there is no competition and providers can take advantage of the captive audience between the security check-in and the terminal exit gates.
Heathrow's bureaux de change stalls are operated by Travelex, which won a bid in 2015 for the exclusive rights to selling foreign exchange at the UK's largest airport.
It is noted that the pound-euro exchange rates on offer for those who pre-book with Travelex and collect at the airport are more competitive, as are the rates they offer for home delivery.
This is understandable given that those able to book online are considering better rates at various providers, underscoring the need to plan currency purchases.
The best exchange rates on offer are however available to those using their card abroad as card providers such as Visa (NYSE:V) and Mastercard (NYSE:MA) are the closest to the market rate we have seen.
But there are some pitfalls if you are not given the option to choose whether to make a payment in the local currency or in your own currency (GBP) at the point of transaction (ATM or card terminal).
If this option is offered always choose the local currency as this means your card provider carries out the transaction. If you choose GBP then the local bank or payment provider will do the transaction and these are usually at eye-wateringly expensive rates.
On a recent trip, this author was offered the option of choosing to pay in the local currency only once, meaning he had to accept the varied rates on offer by local banks on all other occasions (typically 6%!), leaving him wishing he had bought currency with a competitive provider ahead of departure,
An original version of this article can be viewed at Pound Sterling Live
