I was exploring the various options to changing currency, especially if I was buying property abroad.
Everybody’s first option is their bank. Their reputation speaks volumes and is rarely discredited. So yes I can understand why people when buying property abroad use their bank as the first option. It would also appear that most times they don’t even get a second quote.
Whilst I would want to criticize them for lack of financial savings skills, I can also understand that they don’t want any headaches; more importantly why should they worry when the banks are offering 0% commission?
Here is the answer… More pennies in your pocket. Why? Allow me to explain further.
In every deal, even at the supermarket, everybody is trying to convince you that they can save you money. My teenage children ask me why there are sofa adverts just before a ‘bank holiday’? 40% of Sofa’s, 50% of Sofa’s and no payment for 2 years… It’s not the deal but the bottom line. If you have £1,000 for a sofa, which sofa can you get?
When exchanging currencies the same principle applies. If you are changing £100,000 into Euros and the Bank is offering 0% commission they may give you 122,000 Euros. They are buying the currency wholesale and adding between 3% to 4% profit on top. Currency Brokers however using the same principle would give you 125,780 Euros; their profit margin is almost 1%. The saving is almost £3,000!