Forex purchase: Banks are the best

PERSONAL FINANCE

On her way to the airport, Reeti Pandharipande (name changed) realised she had not been able to purchase the pounds she required for her journey to the United Kingdom.

She had earlier spoken to HDFC Bank, which had told her the exchange rate was £1=Rs 88.

However, now she was forced to buy from a travel agent due to time constraints. She was quoted £1=Rs 93.50. Not only was the rate a good Rs 5.50 more, she had to pay an additional 1 per cent as commission for the transaction.

So, she landed up paying over Rs 3,000 in extra cost and commission while she could have purchased at least £34 with that money.

Pandharipande’s case is not uncommon. There are many international travellers who land up at the airport and then realise they are not carrying enough dollars or pounds. They make last-minute purchases, which cost them much more.

“Most travellers keep currency purchase as the last item on their agenda. They don’t compare rates available from different sources and end up paying more than the standard rates,” said Sai Jaiswal, director, Nomads Travel.

An official of one of the biggest travel agencies in the country said that internationally, exchanging currency at the airport is most expensive as they charge higher rates. This is because travel agencies have to pay higher lease rentals at the airport. Also, the authorities share revenues.

Interestingly, this exchange rate also keeps changing according to flight schedules and depending on the expected business from each flight. And the best part, rates at different counters at the airport vary from company-to-company.

As a traveller, the best option to exchange money is banks,as they charge the least. Market players say this is mainly because currency exchange is not their core business. But, there are also differences in their rates.

For instance, HDFC Bank rates are $1=Rs 50.19 whereas ICICI Bank charges $1=Rs 50.90. Travel companies, on the other hand, charge higher. No wonder, Thomas Cook charges $1=Rs 51.55.

Interestingly, there is also a grey market for currencies exchange as well, which charges the least when you buy. But it is best to go through authorised sources.

According to financial planners, it’s best if you purchase currencies from a bank and that too, public sector banks because they are the cheapest.

Also, to avoid carrying too much cash, a traveller should keep two three sources of funds –\ cash, currency-denominated card, credit or debit card and traveller’s cheques.