Chasing the yen – getting the best deal on your travel currency

After some exciting blog posts in recent times, today I bring you a practical no nonsense bit of travel advice. It’s a little dry but it could save you a lot of money and that has to be a good thing!

Nobody likes paying commission on currency exchange but like death and taxes, this just seems unavoidable! “No commission” usually means a terrible exchange rate and finding the best place to purchase currency can be a time consuming process. However, this can be time well spent as the difference in rates can be substantial and if you are travelling to Japan for two weeks you will be spending a fair bit of yen.

I have often noticed at the airport in Japan that the old stalwart of currency exchange and travel money, the travellers’ cheque, returned by far the best rate on your money. I don’t think I have used traveller’s cheques since a school trip to Italy when I was 14. However, never say never and if this was the way to get more yen for my pundo then all the better. So at Bristol Airport I headed to the Travelex desk to purchase £500.00 of sterling traveller’s cheques. Sadly this was not commission free either with a £3.99 charge but I was prepared to live with that. The spot rate at that moment for yen (current bank to bank FX rate) was £1 = 138.79. Travelex were offering yen cash at a “commission free” rate of 121.8323. Daylight robbery I am sure you’ll agree!

Travellers Cheque

Seen one of these lately?? No, I didnt think so

16 hours later I touched down at Narita Airport and headed for the currency exchange desk. As noted on previous visits, for obtaining yen at the airport good old fashioned traveller’s cheques were the  currency instrument of the moment!

GBP Cash = 128.09
Traveller’s cheques = 134.85 – Horray!

Result! The spot rate at the time was 139.0444 so Narita Airport was certainly a lot more competitive than Bristol. No great surprise there but my traveller’s cheques had not let me down. I received 67,425 yen for my TC’s which in total had cost me £503.99. So a realised rate of 133.7824. Not bad I thought. The same amount of yen would have cost me £526.38 in cash at Narita Airport and an incredible £553.42 cash at Bristol Airport.

Next I headed for the ATM. All post office ATM’s in Japan accept foreign issued cards as do the ATM’s in 7-11 convenience stores. Being lazy and poorly prepared this is how I have obtained all my currency in the past. So I withdrew 10,000 yen and waited for this to show up on my bank statement, which it did a few days later – withdrawl £74.28, visa charge £2. So a total of £76.28 which makes a realsied rate of 131.096. Still winning with my mighty TC’s I thought! However, I was somewhat miffed to find another visa charge on my statement for my traveller’s cheques!! Outrageous. Visa had added £10.07 to my purchase (no warning of this anywhere). I could have withdrawn the money from an ATM free of charge and then paid in cash if I had known. Grrrrr. So my traveller’s cheques had now cost me £514.06 taking my realised rate down to 131.1617. So basically almost exactly the same as my yen ATM withdrawal at the airport.

The next point of investigation was online purchases and it seems that this is where the best deals are, as so often, to be had. For advice I turned to MoneySavingExpert.com and in particular the travel money calculator – http://travelmoney.moneysavingexpert.com/

An instant calculator will tell you who is going to give you the best deal for your pounds when purchasing those all important yen for your eagerly anticipated Japan adventures. Now, I did not actually place an order (should have done this a couple of weeks before travel) but the quoted rates of some sites were very close to the spot rate – in one case above the spot rate which made me instantly suspicious. As they say every episode on The Real Hustle, if something seems to good to be true, it probably is!  However, it does seem that for the more organised amongst you, this is the way forward. At the time of writing (12:55 pm, Japan time, 19th April) the spot rate is 133.952. Here are some example online purchases (cash delivered to your door)

Thomas Exchange: 133,000 JPY for £1,003.93 (includes £5 delivery insurance) = realised rate of 132.4794

Best Foreign Exchange: 134,000 JPY for £1,001.93 (includes £7.50 delivery insurance) = realised rate of 133.7491

Moneycorps: 131,000 JPY for £1,006.76 (includes £7.50 delivery insurance) = realised rate of 130.1204

Of course there are a couple of other things to take into account when choosing who to buy currency from. Firstly, Thomas Exchange and Best Foreign Exchange are not regulated by the FSA (Financial Services Authority) and neither do they accept payment by credit card. If you were to not receive your money for any reason this makes your options for getting your cash back more limited. I have no reason to doubt their reliability but it is worth bearing in mind. Moneycorps on the other hand are regulated by the FSA, accept payment by credit card and carry out an online identity check before allowing you to place an order – a good demonstartion they take fraud and protecting their customers seriously.

Other things to look out for are extra delivery charges for smaller amounts and buy back options (should you not use all the foreign currency you have purchased).

That’s about that for my attempt at the definitive guide to purchasing your holiday yen. My conclusion is really the best rates are to be had online for pre-orders of currency. However, if you are a little disorganised in making your travel plans, then sterling (or USD if you are travelling from the US) traveller’s cheques exchanged at the airport (and I highly recommend exchanging at the airport as the process at Japanese banks can be painful) are probably the best rate available. And finally, if that all seems too much hassle, use the ATM’s at the Post Office and 7-11 convenience stores to get your hands on all the yen you need – just be sure to tell your card issuer you will be travelling to Japan or the withdrawal will be blocked by your bank for security reasons.

Hopefully you will find this useful and by shopping around you will have some extras yens in your pocket to spend on all those marvellous goodies available in Japan!!

7 Responses

  1. Nice post AJD. I have used Thomas Exchange Global in the past, and found them reliable. I have also used the ill-fated Crowne Currency, who crashed and burned a few months back; I now thank my lucky stars that I was not one of those who lost a fortune on them. There is also the option of using credit cards in Japan – more and more places now take them, and as long as you choose your card carefully you can get one that has limited or no charges at the UK end. Happy spending!

  2. Hello BlogginH,

    Martin Lewis has all the news on good cards for oversees spending. have to be careful though. Seems the Hailfax Clarity card is the best at present) good double speak from our friends at the Halifax I think. I also learnt that debit cards can be the worst way to spend abroad!

    http://www.moneysavingexpert.com/travel/cheap-travel-money#topcards

  3. It is shocking how much some banks can charge you for the privilege of spending your own money! It’s the same as booking fees on event tickets – ‘booking’ is what you do to a ticket; ‘spending’ is what you to with money! How can there be a fee?!?

  4. Hello,

    I can confirm AJD’s research!

    2nd May 2011 at Nagoya Airport:
    Cash rate: 123.73
    Travellers Cheques: 131.49
    Visa debit card withdrawal (Llloyds): 129.34
    Currency market rate: 135.55

    I got charged £3.99 for my travellers cheques and £2.31 for my visa debit card withdrawal. I got approx. 20,000yen for each making the realised rates 128.079 and 127.437 respectively.

    Travellers Cheques win – and because they seem to have a fixed commission no matter how much you buy (£3.99 at Travelex) the more you buy the better the realised rate will be!

    SK

  5. So were they sterling TCs? I assume so, but then we know that is dangerous…!

  6. Yep, they were indeed gbp / sterling / quids. I am sure the same logic goes for USD too – travellers cheques are tops for Japan!

    • Travellers cheques are the way to go for sure. The rate today at Narita is 146.70 for cash (£)and 153.45 for sterling T/Cs. No commission charges on either which is probably marginally better than the UK at the airport which in itself defies the common myth that airports are the worst deal.

      Avoid paying for sterling T/Cs…
      A lot of UK banks charge for ordering sterling T/Cs in branch (typically 1.5% or min £3). However, often there is no commission on T/Cs ordered online or by phone to collect in branch (TSB and Halifax I believe offer this – other banks probably do too). It’s not a huge amount but worth knowing if you’re planning ahead.

      For me the clear winner (UK customers only)….
      I highly recommend the Halifax Clarity credit card which has no charges for cash withdrawals overseas – difficult to believe but it’s true! I used it in Vietnam, Cambodia and now Japan. You will be charged minimal interest on your overseas withdrawal so to get around this as soon as you have withdrawn the cash go straight online and pay off your credit card balance according to your statement (note: withdrawal may take a day to appear). It’s also best to have a zero balance before you leave home. You are technically not allowed to pre load your credit card as it’s against the terms of use and you could find it blocked which would leave you high and dry in Japan. By paying my bill the day after I arrived I got a rate of 158.30 which is the closest I’ve ever seen to the actual rate even considering the online rates for delivery in UK. When I checked Xe.com (actual rate on 23rd Oct the day I withdrew my money) it was 159 so by far the best deal and no hassle. I read online that JP bank is the place to withdraw money as there are no charges for Mastercard withdrawals with overseas cards. The ATM I used warned me my bank may charge but so far there has been no charge either end. This seems like a no brainer for UK customers with a Halifax Clarity credit card. Even if there if a charge to use the ATM which would usually be 150-200yen which may appear later, this is still the best way to go. I promise to keep you updated.

      Travelling to Japan I would ALWAYS advise on having some yen before you arrive and always check with your bank/let them know you’re travelling to make sure cards are not blocked. Mastercards with the Maestro logo for example are known to be problematic due to a dispute which I understand is still unresolved. The Mastercard website (where you can check the exact exchange rate you will get) is pretty helpful and staff at Halifax provided clear consistent advice. I will never be using Thomas Cook, Travelex or the Post Office ever again. There are huge savings to be had on shopping around and planning ahead.

      To those of you without the magic Clarity card and with a month or 2 to spare before you go… my advice – sign up and save! T/Cs are the next best hassle free option and defy the belief of never trusting airport currency exchange. Japan is different. Unlike the rest of the world it is well known that airports in Japan offer rates comparable if not the same as Japanese banks. That’s precisely why many Japanese themselves leave currency until they are at the airport. I once waited 3 weeks for my local bank (Yamaguchi Bank) to order sterling for my trip home. When the notes arrived the cashiers all wanted to have a look!! Needless to say the rate was also poor.

      In summary:
      1. Top choice Halifax Clarity card – paid off in full as soon as withdrawal appears on statement
      2. Sterling T/Cs – avoid fee by ordering online or by phone. Narita seems to offer reasonable rates.
      3. Online delivery – plan ahead and you can get some good deals. Most people will be nervous about actually receiving the money through the post and you have to weigh up the cost vs your nerves!
      3. Travelex – still offer a great service (online orders only) to pick up at the airport before you leave. Be sure to not forget to collect your money – it’s so easy doable speaking from experience. Also check if the airport you are travelling from has a Travelex counter. Bristol airport just shut down it’s Travelex counter.
      Good luck

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