Those going abroad are being hit by the falling value of the pound and the predatory pricing of currencies by airport transfer kiosks
Holidaymakers in the UK are facing a summer of currency woe as the falling pound significantly raises the costs of going abroad. The double threat of sluggish economic data and uncertainty over Brexit has seen the pound lose value, notably against the dollar and the euro. In addition to this, FX bureau de changes and currency providers are looking to cash in as millions head abroad for their summer holiday.
Last Friday the interbank spot rate (the exchange rate enjoyed between the largest banks) was €1.1170 to £1. However, many providers’ market rates were offering a lot less – last week the BBC reported that MoneyCorp were giving their customers just €0.89 for every pound they exchanged , meaning for each £100 they sought to change they would receive just €89 euros, or €23 below the interbank rate.
The pound has also fallen against the dollar, moving to less than $1.30 for the first time this year. Economic data suggesting a slowing in the UK economy, has pressured the pound as markets price in the fact that a rate rise by the Bank of England’s Monetary Policy Committee might be less likely this summer. Brexit and the ongoing uncertainty over what form it will take, has also seen the pound remain at historic lows since it hit a 31-year low after the referendum result in June 2016.
A report by YourMoney found that on average, holiday makers were losing 12.4% of the value of their money when exchanging it, while The Mail’s ThisIsMoney reported that one couple ended up spending £60 just to use a bank card abroad. However, having paid such high prices just to get foreign currency, an incredible £2.5 billion still goes unspent annually at the end of our holidays. During a time of historic low wage growth and inflation rising above economic growth, such prices of exchange will compound the high costs of living experienced by families across the UK.
Airport Provider £/€ £/€ interbank rate Difference Difference in £
Glint 1.1193 1.11707 +0.99% £1.50 (including fee)
The above chart shows the costs of making a £500 transaction into euros. In clear contrast to the poor returns offered by airport rates, Glint gives users the interbank rate with a simple charge of just 0.5% on the value of the transaction. The above rate is not an average but was given by Glint on Friday morning. On that day you would have been able to buy €556.85 for £500 (€559.65 minus a fee of €2.80) instantly on the Glint app, by contrast at Stansted Airport’s MoneyCorp exchange you would get just €445.
“The charges people face just to spend their own money on holiday are extortionate and wrong,” said Glint founder & CEO Jason Cozens. “Our interests and our clients’ are aligned. We want people to save money, we want people to be prosperous whether they are at home or abroad.”
The dollar and euro wallets on the Glint iOS app mean users can now select which currency they want to pay in wherever they are in the world. They also have the option to pay in gold: “Gold is the safest form of money,” said Cozens. “It maintains its value over one, five, ten and a hundred years and doesn’t fluctuate like other currencies. We wanted to give people the best possible FX exchange rates which is why we now have dollar and euro wallets but we also wanted to give them the best possible money, which is why we give clients the ability to spend gold like any other currency.”