Currency exchange -Use a bank or broker?

Alan Leder decided to find out, as he had 50,000 Pounds to transfer into US Dollars for the purchase of a small yacht and had read that he may have more options than originally thought.

"After a little research on the net I realised that as well as the bank offering a money exchange service, there were a number of smaller specialist companies that were advertised as providing a more affordable bespoke service. I decided to investigate."

Alan followed the same procedure with both his high street bank and www.currencytoday.co.uk, which refer a foreign exchange company based in the City, in order to secure a rate, convert his pounds to dollars, and send them to a bank account in Florida.

First Enquiry; How it Works

Bank: " I called the bank but struggled to find the right person who dealt withmoney transfers. After waiting on hold for some minutes, I was put through to someone who explained the process. It seemed easy enough, but when I asked for an exchange rate I was told I couldn't get one over the phone and had to come in to the branch if I intended to do the transfer. Once I arrived there, I had to explain my situation again to another person, but the one advantage was that my money was already in the bank so if I needed to do the transfer it could be theoretically sent out from there to the U.S bank. "

Brokerage: " The person that answered my call was the same person that explained how they worked and what I had to do. To use their service, I had to set up an account by filling in an online form and sending copies of I.D. To buy the currency, I would have to make an electronic transfer from my bank to theirs, then they would send the US Dollars I had purchased on to the bank in Florida. This meant I would have to go to my bank anyway to do this, although they did offer online or telephone banking methods of payment. One big advantage was that when I asked for an exchange rate, I was told almost straight away, so I could see exactly what the costs would be. "

RESULT: TIE

Bank not as functional or easy to use, but brokerage slightly longer in setting up.

Costs and Charges

Bank: " They charged £28 to transfer the Dollars to the overseas bank, but advised me that a further charge may be applicable at the other end although they couldn't tell me exactly what this would be. Once I finally had the right number for the foreign exchange desk, I managed to see what exchange rate they were offering, but on calling back later that day found that it was the same rate, regardless of the increase I saw online."

Brokerage: " There was no transfer fee and they even said for no additional fee they could absorb any cost that the receiving bank in Florida may charge. I was dubious at first but they guaranteed it would be lower than the cost at the other end, and because I needed the amount to be exact, it seemed like a useful service. The exchange rate was better than the one from my bank, and I could call back, as I did frequently, to check on the rate as I saw it move on my screen throughout the day. "

RESULT: BROKERAGE

Lower costs overall from the brokerage, and a better exchange rate.

Sending the Payment

Bank: " I was advised it would take 2 to 5 working days for the payment to be sent, but they couldn't guarantee exactly when. I would have to go into the branch and fill in some forms before they would authorize the payment."

Brokerage: " I had already sent them by fax the details of which bank in Florida to send the dollars to, so I just had to secure an exchange rate and instruct them to send them. If I did this in the morning, they could send the payment the same day, with the U.S bank receiving the funds same day."

RESULT: BROKERAGE

With more flexibility and a faster payment method, the specialist brokerage comes out in top.

OVERALL WINNER: BROKERAGE

The specialist currency brokerage win, as they are bespoke in dealing with foreign exchange. They are more capable to achieve a better Euro Pound US Dollar exchange rate,and provide a better service than the department of a bank, who have a number of other interests.