I was at Heathrow yesterday in a connecting flight. I was hungry so I decided to have lunch. I elected to go with the same lunch I had nearly a month ago at the same place. The total bill was for £14 (including tip). I gave the waitress $25 (I’m talking US $) in cash as I was stepping out, telling her that this should be more enough (thinking that I overtipped). But, the waitress told me she wanted to check whether this is enough or not. I waited for a couple of minutes and then she told me: “you still owe us 20 cents”. So I had to give her another dollar. I then told her that according to my calculations, I overtipped her for an extra $2.6 because I had the same lunch for the same price a month ago, paid by credit card, and I got charged for $22.40 (they calculated the rate at $1.6). Sure the foreign exchange rate might fluctuate in a month, but not that much! She told me that the forex rate in shops at the airport is much higher than the normal rate, and they often charge an extra 10-15% on top of the normal rate. Their rate was 1.8 (e.g. 1 pound equals $1.8).

I was personally under the impression that it’s better to pay in cash than in credit cards at airports, because Visa (and MasterCard) charge people an extra 1% over the bank rate. Apparently, I was wrong, because I didn’t know that shops charge 10-15% over the normal rate.

Stick with using your credit card at the airport – it’s always the lesser of the two evils. Unless, of course, the cash you have on hand is in that airport’s currency.

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