Having had to buy Euros several times last year I was amazed at just how many companies there were who bought and sold currency! They all claimed to offer the best exchange rates and that they were ' the best company to exchange money' and they all claimed that there was no commission! Wow! no commission! Awesome. I'm saving money already and I haven't even opened my wallet!
I called one of the companies I'd seen on Google and asked for a rate if I were to buy €15,000.00. I'd checked what the bank were offering and also knew what the post office were offering so I had a general idea of what the exchange rate was; from memory it was around 1.1510 back in May 2011.
The guy I spoke to gave me a price of 1.1480! Great... the bank that same day were offering 1.10!! OK I said, I'd like to buy at that price. I was brought back down to earth when the chap on the phone said that I'd first have to open an account and then also mentioned that as exchange rates moved throughout the day that the rate may be better or worse by the time my account was opened.
There's always a catch!!
To open an account I had to complete a form and provided my personal details, DOB,address etc. I also had to provide information on the source of my funds, my reason for buying currency and the nature of my business. I duly returned the documentation and waited for confirmation that my account was good to go.
After a few days I was telephoned and told that they had been unable to verify my address ( I had recently moved house ) and therefore I was asked to provide a copy of my passport and a copy of a recent utility bill! I scanned said items and emailed straight away. Within 1 hour I received another call to confirm that my account was now active. These guys were certainly thorough.
I asked for a price if I was to buy €15,000.00.
The reply I got was... 1.1880... I was delighted! The market had indeed moved and in my favour. I'd like to go ahead and buy at that price I said.
I received a contract note within ten minutes and then instructed my bank to transfer over the sterling equivalent. My Euros were sent out on the same day and all in all it was a good experience.
The next day I was chatting to a colleague who had also bought some Euros on the same day that I had. I asked him what exchange rate he received ( gloating a bit!!) 1.1940 he said!
He then proceeded to explain that he had accounts opened with 2 or 3 different brokers. It turns out that although no brokers charge a commission as such that they do charge a % on the exchange rate. I had actually been charged 1% as the exchange rate was just over 1.20... this meant that I had just paid 125.00 for the privilege of buying Euros! I asked my colleague how many Euros he'd bought... €20,000.00 was his reply. It had only cost him 84.00!!!
How had this happened? My colleague then explained that when he first started buying currency that he used his bank, realised he was paying too much and contacted a broker friend of his who suggested that he should open at least two accounts with different brokers and then play one off against the other! Don't they all work off the same prices I asked? They do he said but then explained that the broker was looking to make as much money on each transaction as they could. At the same time the market was getting so competitive that quite often brokers could afford to undercut each other in order to win the business.
I was a tad annoyed but immediately contacted another broker and opened another account. On my next currency purchase I got the 'best' price from broker A and then called broker B to see if he could improve. If the rate couldn't be bettered I figured out that the rate must be pretty competitive while if the other broker offered a better rate I'd simply call the other to see if he could match it!
The moral of the story is this; shop around, open a couple of accounts and simply play one off against the other! They need your business and any profit is profit, no matter how small!
I hope this article is of interest/use to someone out there, just for your information... the best company to exchange money that I used was from one of the smaller companies! Good luck!