Significant savings on foreign exchange transactions are to result from new charges which have been announced by banks and building societies.
The financial institutions have announced new and simpler pricing structures which will lead to savings of up to 50 per cent in some cases for retail customers. They will come into effect following the introduction of the euro on January 1st.
The new structures were announced after the director of consumer affairs, Ms Carmel Foley, issued a directive to 16 financial institutions, telling them they could not charge different "buy" and "sell" rates for euro currencies after December 31st. She told them current and proposed charges for foreign exchange transactions were to be published in the national newspapers today and again on January 4th, the first working day of 1999.
Those who published their new charges in today's Irish Times include AIB, Bank of Ireland, Ulster Bank, Irish Permanent, National Irish Bank, First Active and EBS Building Society.
Under the new system, only a single handling charge will be incurred when changing money from one to another of the 11 currencies taking part in Economic and Monetary Union (EMU). Previously, most financial institutions charged both a commission and a "spread" charge when exchanging currencies.
The spread is the difference between the buying and selling rates offered and involves a charge which is not obvious to the consumer.
In the case of customers purchasing travellers cheques or foreign currency through AIB, the new handling charge will be 3.5 per cent, with a maximum charge of £15.00. Bank of Ireland's handling charge for foreign currency will be even lower at 2.25 per cent for transactions of £700 or less, subject to a minimum charge of £1.00, and 1.5 per cent for transactions of more than £700.
From January 1st, for example, a customer changing £50 into French francs with AIB will pay £1.75 compared to £2.71 - commission of £1.00 and a spread charge of £1.71 - a saving of 35 per cent. A customer changing £100 should save 21 per cent.
