We compare the foreign exchange rates of different banks and find some surprising results.
A reader wrote on our
question board this morning, commenting on our article comparing
credit card overseas transaction fees:
"The banks also differ in the exchange rates they use when converting foreign currency transactions to the currency of the card. Presumably, a bank could have low fees but use an uncompetitive exchange rate, or vice versa!"So how much variance is there in the foreign currency exchange rates offered by banks? Which banks offer the most competitive rates and how much difference will it make to your purchases?
We took a sample of the exchange rates offered by nine Australian banks, including the big four, some smaller credit unions and some international banks and compared their published sell rates for telegraphic transfers on U.S., U.K., European and New Zealand currencies.
The table below shows the results, plus the time the sample was taken. The bottom row shows the Reserve Bank of Australia's reported exchange rates for close of trade on the previous business day.
| Bank |
USD |
GBP |
EUR |
NZD |
Date/Time |
 |
0.7714 |
0.4692 |
0.5462 |
1.2157 |
6 Jul 09 11:23 CST |
 |
0.7836 |
0.4766 |
0.5565 |
1.2412 |
6 Jul 09 11:17 CST |
 |
0.7812 |
0.4766 |
0.5549 |
1.2342 |
6 Jul 09 11:25 CST |
 |
0.7840 |
0.4780 |
0.5570 |
1.2435 |
6 Jul 09 11:26 CST |
 |
0.7817 |
0.4763 |
0.5560 |
1.2399 |
6 Jul 09 11:19 CST |
 |
0.7900 |
0.4819 |
0.5639 |
1.2482 |
6 Jul 09 11:15 CST |
 |
0.7859 |
0.4764 |
0.5556 |
1.2329 |
6 Jul 09 11:13 CST |
 |
0.7830 |
0.4775 |
0.5568 |
1.2367 |
6 Jul 09 11:20 CST |
 |
0.7848 |
0.4795 |
0.5587 |
1.2419 |
6 Jul 09 11:16 CST |
| RBA |
0.8040 |
0.4893 |
0.5697 |
1.2586 |
2 Jul 09 16:00 EST |
HSBC was the clear winner, offering the best rates across all four sampled currencies. The worst performing bank was American Express.
Of the 'big four' Australian banks (ANZ, Westpac, NAB and Commonwealth), Westpac performed the best across all currencies, except the U.S. dollar, where NAB offered a slightly better rate. Commonwealth performed worst for the U.S. dollar and the U.K. pound, and NAB offered the worst rates for the Euro and N.Z. dollar.
The table below shows the effect of the rate variance on a £1,000 GBP purchase. The best rate (HSBC) would charge $2,075.12 (plus applicable fees and charges), while the worst rate (American Express) would cost $2,131.29 - a variance spread of $56.17.
| Bank |
£1,000 GBP |
|
$2,131.29 |
|
$2,098.20 |
|
$2,098.20 |
|
$2,092.05 |
|
$2,099.52 |
|
$2,075.12 |
|
$2,099.08 |
|
$2,094.24 |
|
$2,085.51 |
On average across all nine sampled banks, you'll pay $2,097.02 - $21.90 higher than with HSBC.
It's important to note this is not an exhaustive analysis. The rates quoted were a sample taken from the web sites of the respective financial institutions. This article merely demonstrates how slight variations in exchange rate can have large implications to the total cost of a foreign purchase.
