Making the most of your travel money
Falling exchange rates mean that you’re likely to get less for your pounds when travelling abroad this year. And that, of course, means that you’ll be looking more closely than ever to getting the most from your holiday spending money.
When spending money abroad – and as in this country – you have two basic options: cash or card (debit or credit). So, let’s consider some ways of making the most of each of these possibilities.
The advantage of cash, of course, is that you have the money in your pocket – especially useful for smaller purchases from kiosks, leaving tips, or paying vendors who do not accept foreign-issued cards.
There is obviously a risk of loss or theft when carrying cash, so the Consumers’ Association’s Which? magazine suggests that you never convert more than is covered by your travel insurance. In addition to the obvious security risk of carrying any amount of cash around with you, there are other considerations to take into account when buying your foreign currency:
When to buy
- with fluctuating exchange rates, the timing of any conversion from sterling to local currency is critical – buy now and you might lose out on a more favourable rate nearer the time, or leave it and risk the value of the pound falling still further;
- one way of hedging your bets, suggests the Money Saving Expert, is to exchange just half now and half nearer the time you travel;
Where to buy
- the rate of exchange you are offered may vary quite widely – especially when commissions and fees have been taken into account – so it pays to shop around;
- the Money Advice Service lists the many places you may buy foreign currency and suggests that some of the most favourable rates may be found online;
- don’t forget that some supermarkets offer their own travel money service, so, for example, if you shop at Sainsbury’s, you can pick up your travel money and benefit from Nectar points too;
- don’t leave it until the very last minute, though, since exchange bureaux at the airport, at your hotel or once you arrive at your destination, are likely to prove far more expensive than in the UK or online. (The BBC highlighted how travellers got 98 euro cents for a £1 at the airport compared with buying in advance from the Post Office offering €1.0819).
If you use your debit or credit card abroad, of course, the transaction is made at the current rate of exchange – so you do not have to worry about the timing involved in converting currencies.
What you do need to worry about, however, is the potentially high cost of using either of your cards when you are overseas. Debit cards, in particular, may involve a considerable expense in terms of the conversion fees and commission you need to pay to your bank. If you choose your credit card wisely, though, you may find one that adds no fee for the exchange of sterling – so, effectively improving the rate of exchange you receive.
You might also want to consider a prepaid card in the currency you will be using when on holiday. The exchange rate is the one prevailing at the time you load the prepaid card – so, you may face some indecision about the best time to make that transfer – but a prepaid card is clearly more secure than carrying around lots of cash.
A potential drawback with prepaid debit cards, however, is that many may not be accepted by some businesses – such as hire car companies or at petrol stations where you are paying at the pump.
While there is no fail-safe way of getting the cheapest travel money, hopefully these tips have given you some ideas of what you need to consider.
Any data used in this article is accurate at the time of writing.