When Tom, 47, decided to transfer a significant amount of his net worth to the United States, he asked his service representative at National Bank of Abu Dhabi's elite banking whether the rate would be same as last year. In theory, the dirham's peg to the US dollar meant he should not have had to ask.
"The US rate never moves," he says. "The rate you got two or three years ago, you should be able to get again."
But in fact, he lost out on the transfer - a rate of Dh3.676 per dollar a year ago was now Dh3.6861.
Because it was a particularly large transfer, the value lost through the remittance totalled tens of thousands of dollars.
It was several months before the mistake was realised, and after Tom contacted the bank, he was eventually able to haggle the bank down to his previous rate.
But Tom, who asked not to be identified in full, visited an exchange house and made a similar dollar transfer at a rate of Dh3.6735 per dollar - realising just how much banks can take in exchange margins from unwary customers.
"They're just basically taking money out of our pockets," he says.
National Bank of Abu Dhabi's rates vary according to the size of the transaction, the channel utilised and the client segment involved, says George Beatty, general manager of consumer and elite banking.
"Comparison of rates between the banking sector and exchange houses is not an apples-to-apples assessment," he says. "Exchange houses face a different regulatory, infrastructure and service environment to banks and do not offer the same overall proposition."
The warning should resonate, especially as now is an attractive time to remit currencies home. The dollar's strength means a substantial boost for UAE residents paid in dirhams.
The US dollar has comfortably outperformed every major currency except the Mexican peso so far this year.
It has gained 9.3 per cent against the Indian rupee, 7 per cent against the British pound, and 14.4 per cent against the Australian dollar. Worst of all are the South African rand and the Japanese yen, down 15.2 per cent and 13.3 per cent respectively.
In theory, UAE expatriates paid in dirhams should be cheering the news, as it allows them to make payments back home much more cheaply.
But savers can still lose out, even with a favourable exchange rate.
The US dollar, pegged to the dirham at a fixed rate of Dh3.67 each, illustrates the problem.
Banks take a cut of every transaction by offering a less favourable rate than that advertised by exchange houses, an additional hidden cost that varies from bank to bank - then there are the remittance fees on top.
The official rate contrasts with banks' advertised rates which vary from between Dh3.68 to as much as Dh3.692. A lower rate means each dollar goes further.
But there are few means of comparing these rates. And the dilemma facing consumers is underscored by the wide variety of fees from bank to bank.
Outward remittance fees at banks of Dh100 are not uncommon, with some as high as Dh150.
Rates are hard to benchmark because they can vary from customer to customer and depend on a large number of factors, let alone accounting for market fluctuations.
And some banks offer free transfers - NBAD, for example, has waived remittance fees for Ramadan - so for small transactions banks may in fact be more competitive than exchange houses.
"When you speak to the banks, you will find that premium customers with a long-term relationship can get a better rate than a one-off transfer for example," says Ambareen Musa, chief executive of Souqalmal.com, the price comparison website. "The other variables can be the method of transfer, the urgency of the transfer or even the amount that you are transferring."
Transfer rates can also depend on how big of a footprint the bank has outside the UAE, which alters their cost of servicing the transaction, she adds.
Online exchange companies are seeking to take advantage of customers' dissatisfaction with bank transfers and capture a slice of the $11 billion that the IMF estimates is transferred out of the UAE by its expatriate workers every year.
The high numbers of exchange houses has made transfers from the UAE among the cheapest worldwide for some currency pairings, according to data from the World Bank, which collates data on some of the more widely used currencies, including the Indian rupee and the Philippine peso - and crucially the exchange-rate margins charged by various exchange shops.
MoneyGram and Wall Street Exchange come out the cheapest for certain pairings, but the rate varies from currency to currency.
But the World Bank's developmental objectives means it provides scarce information for those expatriates transferring to the United Kingdom, the United States or Australia.
Financial websites are also springing up to add to the competition on banks.
The UK's Global Currency Exchange Network is one, allowing commission-free online transfers. Its transfer margins are among the thinnest on the market, with a rate of one US dollar per Dh3.67317.
The downside is that only a handful of currencies are available, including the British pound, the euro and the Canadian dollar.
The unfortunate fact is that there is no one-size-fits-all solution to getting the best foreign-exchange rate. But savers blindly clicking through their banks' websites are probably losing out.
ghunter@thenational.ae
