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Understanding the Fine Print: Hidden Fees in Currency Exchange Advertiser Disclaimer Lightbox

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Mike Smith
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Reviewed by Mike Smith

Mike Smith is an experienced financial professional and serial entrepreneur with over four decades of experience in the financial services industry.

He began his career as a financial planner in 1979, and within 11 years, he and his co-directors had grown the financial services business to one of the largest in the UK. The company was then sold to a major financial institution.

Mike went on to work as a Director for Blue Chip boards of Sun Alliance, Legal & General, and Laser UK (BNP Parisba), all of which were regulated by the Financial Services Act and/or the Banking Act, requiring regular and frequent testing. Through these roles, he gained a comprehensive understanding of financial services and the banking sector.

As Head of Business Development at LaSer UK, where he was in charge of the development of new markets and processes for banking and credit cards, Mike was reporting directly to the board and the Managing Director.

He was also the Business Development Director at Legal & General, where he was tasked with developing alternative distribution and troubleshooting services for small to medium businesses.

Additionally, Mike has served as the National Development Manager at Sun Alliance Life & Pensions, advising the board on company development for small to medium enterprises and troubleshooting underperforming branches and regions.

In 2007, Mike shifted his focus from Blue Chip companies to SMEs and began advising UK SMEs. Since then, he has helped hundreds of directors navigate precarious financial positions.

Mike is currently a Director at Company Debt Ltd, which specialises in providing support and rescue options for UK SMEs in financial difficulty and who are in need of licensed insolvency advice.

Mike is also a Director on the board here at Business Expert and has a wide range of experience in invoice discounting and factoring after several years of advising UK businesses on this form of asset-based finance. He also has extensive knowledge in the property finance areas within the UK, as well as the banking sector.

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June 28, 2023

In the world of currency exchange, as in many financial sectors, the devil is often in the details. The most attractive exchange rates may turn out to be less than advantageous when you factor in the hidden fees and charges that some providers apply. Understanding these fees is crucial to ensuring that you’re getting the best possible deal when you need to exchange currency.

Here are some of the potential hidden costs involved in currency exchange.

Transaction Fees

One of the most common types of fees in currency exchange is the transaction fee. These can either be fixed fees, where you pay the same amount regardless of how much currency you’re exchanging, or variable fees, where the cost increases as the amount of currency you’re exchanging goes up.

While transaction fees are usually disclosed upfront, they can still add a significant amount to the total cost of your currency exchange if not considered in advance.

Service Fees

Some currency exchange providers may charge a service fee, ostensibly to cover the cost of providing the service. This is usually a percentage of the total amount being exchanged.

Service fees can often be hidden in the fine print of the service agreement, so it’s essential to read through all documentation carefully.

Spread Fees

The spread fee is a less obvious type of fee because it’s integrated into the exchange rate you’re offered. The spread is the difference between the buy and sell rate of a currency, and it can vary significantly from provider to provider.

You can spot these fees by comparing the offered exchange rate to the market rate. If there’s a big difference, you’re probably paying a high spread fee.

Withdrawal Fees

If you’re using an online exchange service and want to withdraw your money to a bank account, you may need to pay a withdrawal fee.

These fees can vary depending on the amount of money you’re withdrawing and the method of withdrawal.

Third-Party Fees

If you’re sending money abroad, there may be third-party fees involved. These could be fees charged by banks or other financial institutions involved in the transfer.

Your currency exchange provider doesn’t control these fees, but they should still inform you about the possibility of such charges.