If you are ever promised a ‘free transfer’, you should know that there’s really no such thing. All banks and currency brokers have to make money somehow. They never offer people completely free transfers, otherwise, they would never make any money and would go out of business pretty quickly.

So, how do these companies make a profit? Currency exchange companies quote you an exchange rate at a small margin from the ‘interbank rate’ – sometimes referred to as the ‘mid-market rate’ – which is the rate at which the banks deal in large amounts of, typically, £5 million or more.

The difference between the rates you are quoted and the interbank rate is known as the ‘spread’. The greater the ‘spread’ the greater the profit the currency company or bank will make and the worse deal you’ll get.

Typically, a specialist foreign exchange company will take a smaller ‘spread’ than the big banks.

Many currency providers also offer the promise of ‘zero commission’, but really this is a marketing device as the companies make the majority of their money by charging a bigger spread.

Some foreign exchange providers also charge transfer fees for transactions, which are extra charges on top of the profit which has already been made via the spread.