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How to save foreign exchange fees – UK

How to save foreign exchange fees – UK

If you enjoy travelling and spending abroad or are a digital nomad and want your money to go further then this is for you!

When you look at your card statements, you may see bank charges imposed on purchases that are not in your card currency. These are foreign exchange fees which can take a chunk out of your holiday budget (on accommodation and spending). This is a post on how to save on foreign exchange fees for UK residents.

Here are three digital challenger banks which we have used personally to save on foreign exchange fees.

1 Revolut

Revolut was launched in July 2015 and as of February 2018 was the 1st UK digital bank to break even. It is the only digital bank that operates across Europe. It is in the process of securing a banking licence in Lithuania which it plans to passport across Europe.

For digital nomads or those who enjoy traveling, Revolut offers (i) Standard (ii) Premium (iii) Metal and (iv) Business accounts. They are pre-paid accounts so you do need to top up.

Standard accounts features

  • Free UK current account and Euro IBAN account
  • Interbank FX rates which means that you get the wholesale market rates, which are the best possible exchange rates possible. This spot exchange rate is better than other consumer / public foreign exchange services by 3- 5%. However, on weekends (Friday 23:59 – Sunday 23:59) as the Foreign Exchange market is closed, there is a 0.5% surcharge on major currencies (e.g. USD, GBP, EUR, AUD, CAD, NZD, CHF, JPY, SEK, HKD, NOK, SGD, DKK, PLN and CZK). A 1% surcharge applies on other currencies outside the FX market hours. For less liquid currencies such as Russian Ruble, Thai Bhat and Ukrainian Hryvnia, there is a 2% mark up on the weekend.
  • Free bank transfers in 24 fiat currencies (this will take 2 business days) and there is a small fee of 0.05 if the amount exceeds £5000 each month
  • £200 / 200 euro free ATM withdrawals per month
  • Ability to freeze the account if the card is lost and then unfreeze it when it is found
  • Turbo boost (immediate transfer) fees
  • In order to get a physical card you will need to pay £4.99 delivery charge
  • Records and categorises your spending

Premium account features

All benefits of the basic Revolut account plus:

  • Free Premium cards (with 4 exclusive designs)
  • Exclusive access to disposable virtual card
  • Free spare cards
  • Free global express delivery
  • Unlimited free multi-currency exchange (at the interbank rate)
  • Double the standard free ATM allowance
  • Free overseas medical insurance
  • Instant access to cryptocurrency
  • Free turbo transfers
  • Priority support
  • £6.99 per month

Revolut Metal also gives its members exclusive access to:

  • Exclusive contactless Metal card
  • Dedicated concierge
  • Up to 1% cashbank in a (crypto)currency of your choice
  • Triples the standard free ATM allowance (i.e. up to £600 per month)
  • Unlimited exchange in 24 fiat currencies
  • Instant access to 5 cryptocurrencies
  • £12.99 per month

Freelancer business accounts are priced at £6.99/month with <£100K of incoming funds per month for an annual contract.

Company business accounts have 3 tier pricing from Start £25 per month, Standard £100 per month and Professional £1,000 per month.

Update: As of 13 December 2018, Revolut has been granted a European Banking licence. This means that it can now offer current accounts, consumer and business lending and overdrafts and the first €100,000 of customer funds will be covered by the European Deposit Insurance Scheme. These accounts will be rolled out in key markets such as UK, France, Germany and Poland to start with in 2019. In addition, Revolut has plans to rollout in Asia and America in 2019.

Click the link to open an account from Revolut.

2 Monzo Bank

Monzo was founded in 2015 and is an online only UK digital bank. UK residents must be aged 16 or older and some of its features include:

  • Full UK current account
  • Mastercard Debit Card
  • Ability to freeze the account if the card is lost and then unfreeze it when it is found
  • Instant notifications for transactions
  • £200 fee free withdrawal limit for overseas ATMs; 3% surcharge to withdrawals exceed £200 cumulatively during a 30 day period
  • Access to an overdraft subject to an approval. There is a fee free £20 buffer and once this has been exceeded, there is a £0.50 charge for each day the account is overdrawn.
  • Protection for up to £85,000 by FSCS
  • Mastercard exchange rate and no overseas transaction fees
  • Joint accounts limited to a maximum of 2 people
  • Good for budgeting and putting money aside
  • Records and categorises your spending

A Monzo account is also easy to open and operate however the foreign exchange rate during the weekdays are not always as good as those offered by Revolut but are better on weekends compared to Revolut. Looking at the reviews left by customers, its customer service appears to be better than Revolut and Starling.

Click the link to open an account from Monzo.

3 Starling Bank

Starling Bank was founded in 2014 by Anne Boden, a former chief operating officer of Allied Irish Banks. It was granted a banking licence by the Bank of England in July 2016 and launched its first mobile only personal account in May 2017 and business bank account in March 2018.

  • Account opening takes about 20 minutes
  • Contactless card delivered within a week
  • Records and categorises your spending
  • Goals helps you to budget and save
  • Deactivate card from your smart phone application if it gets lost or stolen
  • Can add up to £250 a day to your account or transfer as much as you like using ‘Faster Payments’ and online banking
  • Mastercard Exchange rate for foreign exchange
  • Fully licenced by the FCA and PRA which means up to £85,000 of your money is protected
  • Only UK digital bank (out of Revolut, Monzo) that pays interest. 0.50% pa for account balances below £2,000, and 0.25% for balances between £2,000 and £85,000.
  • Personal accounts are free and connects with digital wallets (for Apple Pay, Google Pay, Samsung Pay, Fitbit Pay)
  • Business accounts are free if it has less than 10 employees and less than £1.7 million annual turnover
  • Customer support is via phone, email and messaging
  • No options to remove contactless from your card

Click the link to open an account with Starling Bank.

SUMMARY – Save foreign exchange fees – UK

There are many similar features across all 3 banks. Both Monzo and Starling use the Mastercard exchange rate and are protected for up to £85,000 by the FSCS. However, the foreign exchange rate by Revolut can be cheaper during the weekdays. If you want to earn interest income, Starling Bank is the only digital bank above that pays interest. Since it is fairly straight forward to open an account, you may like to open all accounts and see which ones work best for you. What is positive is regardless of the account that you open, you will already be saving on travel and shopping money!

 

Are there any other cards or methods that you use? Let us know how you save foreign exchange fees – UK!

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