A SmarterTravel.com article by Ed Perkins: Beware the New Airport ATM Scam mirrors my recent experience at London Gatwick Airport for on-arrival local currency at lousy airport currency exchange rates. It pays to know the bank market rates for currency from a site like xe.com. Getting currency at the airport with a U.S. bank debit card used to seem like a better deal to me when it was common to find a relatively decent exchange rate within 5% of the bank market rate from an airport ATM. My recent experience in London Gatwick had me needing to buy some British pounds at bad exchange rates.
I had 80 Euros in my wallet from a previous trip to Europe when I landed in Ireland for 48 hours before flying to London. I didn’t need to buy euros in Ireland during the brief stay. London Gatwick Airport LGW at 19:00 on a Saturday night and the only ATM in South Terminal was selling at a rate 1 GBP for $1.80 USD or $1.7957 to be precise. The bank market rate was $1.57 per pound. That is almost a 15% mark-up.
I exchanged $20 USD for £11.14 GBP and pennies. The twenty dollar exchange for £11.14 GBP was enough to pay for the 3 GBP bus fare on the dedicated Holiday Inn London Gatwick Airport shuttle to get to my hotel for the night. The cashier at ITT Moneycorp Limited waived the exchange rate fee for me when I said I just needed money to pay cash bus fare.
The purchase of two Oyster cards at £46 GBP the next morning at Gatwick Airport Concierge posted as $72.19 on my credit card statement for an exchange rate $1.5693 USD = £1.00 GBP.
That £11 pounds lasted 48 hours. Credit cards are accepted nearly everywhere. I prefer not to use a credit card in pubs where they often want to hold the card. On my third day in London, I went to an HSBC bank ATM on Shaftesbury Ave near Covent Garden in central London and withdrew 200 GBP using my debit card. The exchange rate $1.6194 USD = £1.00 GBP. Total withdrawal $323.88.
We got home with about £20.00 GBP in cash, which will be sufficient upon arrival in London to get into the city on the next trip for a better bank exchange rate than the airport.
IHG Rewards Club MasterCard: exchange rate for £1.00 GBP = $1.57 USD.
HSBC ATM in central London: exchange rate for £1.00 GBP = $1.62 USD is 3.2% higher than credit card.
ITT MoneyCorp ATM LGW London Gatwick Airport: exchange rate for £1.00 GBP = $1.80 USD is 14.65% worse than credit card exchange rate and 11% worse than exchange rate at central London major bank ATM.
Cost to buy £200.00 GBP from central London ATM = $1.62 USD = $324 USD.
Cost to buy £200.00 GBP from London Gatwick Airport ATM = $1.80 USD = $359 USD. You are paying an airport exchange rate fee of an extra $35 USD for every £200 GBP you buy compared to using a major bank ATM away from the airport.
These numbers were accurate for the dates of transactions in November 2014 and taken from receipts, credit card and bank statements.