Your ultimate holiday money guide: Currency exchange rates, bank charges, prepaid cards – and how to keep costs down
Plan ahead and you’ll have the best possible chance of bagging the most for your sterling (Image: Getty)
Holidaymakers jetting off for their summer escape should pay careful attention to rates over the next few months, as the pound continues to tremble in the aftermath of the Brexit vote and snap election.
With weeks to go until schools break up for peak travel season, now is the time to start planning your travel money to ensure you get the very best rate.
Firstly, the sooner you start shopping around the better. Those who leave their cash to the last minute are at risk of paying up to 10% more at the airport – and even more than that if you don’t reserve online first.
And while you’re at it, once abroad don’t forget to always choose local currency when paying in shops, restaurants and even ATMs. Going for local currency may feel counterintuitive, but it actually works out cheaper as you won’t be hit with the currency conversion cost.
If you find this happens to you anyway, and you’re billed in pounds, refuse it. Write ‘DCC rejected’ on the receipt and insist on being charged in local currency.
1. Book your currency online
For the best rates, order your currency online in advance of your trip. This will give you access to not only the best prices, but also the option to lock in a rate – which you can later turn down if the pound improves further.
For example, Travelex allows you to reserve money 30 days in advance and cancel up to 24 hours before you leave – enabling travellers to get the best value for their pound.
2. Avoid the airport
The worst decision you can possibly make is to trade your money at the airport.
That’s because airport concessions offer some of the highest rates around – and you could end up flushing half of your holiday savings down the drain.
According to figures, exchange rates at the airport can be more than 10% more expensive than elsewhere, meaning that you could lose £100 for every £1,000 you exchange.
“Don’t leave changing money to the last minute, you’ll miss out on better rates and end up paying as much as 19% more meaning you could lose £150 for every £1,000 exchanged,” FairFX chief executive Ian Strafford-Taylor told Mirror Money.
“Airports offer some of the worst exchange rates in the country.”
Left travel money to the last minute? Check which companies have a bureau de change in the airport or ferry terminal you’re travelling from and order online for airport collection. You’ll lock in a far better rate than if you wait and buy it over the counter.
3. Set up a tracker – and cash in on the spike
Set up a rate alert with an online currency provider and you’ll get notified when the rates move in your favour. These are available on most major travel money websites – or download an app on your smartphone instead.
Vincent Arcuri at Travelex explains: “When it comes to buying your travel money, getting the best value is all about finding the most purse-friendly exchange rate.
“One way to get the best deal is to use a Travel Rate Tracker . This monitors exchange rates so you don’t have to, and helps you get the most foreign currency for your pounds.
“Remember, it’s important here to look at the total price that a transaction is going to be and not just at the exchange rate, since there can sometimes be additional fees added to your purchase.”
4. Choose more than one payment method
Don’t hedge your bets, explains Emma Coulthurst at TravelSupermarket , instead, opt for more than one payment method and you won’t lose out.
“Carry a market-leading credit or debit card for use overseas, a prepaid card and also some cash.”
“Make sure you get credit and debit cards that are specifically designed for overseas usage with minimal (if any) charges,” she adds.
“But, be careful. Many credit and debit cards carry a 2.99% transaction fee with some having additional one-off fees for purchases. That’s an extra £2.99 to pay for every £100 you spend.
“Debit cards also tend to include a hidden currency loading fee which can add as much as 3% to the cost – so watch out.”
Metrobank, Norwich & Peterborough and Nationwide all offer accounts with debit cards that don’t charge for use in some countries.
Halifax, Saga and Nationwide are also amongst a handful of providers who offer credit cards with no fees for spending abroad.
We’ve explored some of your plastic options abroad below.
5. Invest in a prepaid travel card
Using a prepaid card means that you can top-up and lock-in when the rates are at their strongest.
To activate, all you need to do is sign up, load it up with money and then use it just you would any debit or credit card abroad (wherever you see a Mastercard or Visa symbol). No credit check is necessary – but you must be at least 18 to apply.
One of the key advantages of prepaid cards is that if it goes missing or gets stolen abroad, your cash is safe – and you can get it blocked in minutes (the faster you act the better on contactless ones). The downside is that it offers no financial security (like say Section 75 on your credit card). It can be used almost anywhere, but not at petrol stations or to hire a car.
MoneySupermarket’s 5 best prepaid cards right now:
- Cashplus prepaid mastercard : No transaction fees, no monthly fees, £5.95 card fee. An ATM withdraw fee of £3 does apply on international transactions.
- Pockit prepaid mastercard : No transaction fees, no monthly fees, 99p card fee. An ATM withdraw fee of 99p does apply in the UK, or £2.25 on international transactions.
- Tuxedo pay monthly card : No transaction fees, £4.99 monthly fee, £9.95 card fee. An ATM withdraw fee of 50p does apply in the UK – or £2.25 on international transactions.
- Cashplus prepaid mastercard deluxe : No transaction fees, £9.95 monthly fee, £5.95 card fee. An ATM withdraw fee of £3 does apply on international transactions.
- iCount prepaid mastercard monthly : No transaction fees, £9.95 monthly fee, £4.95 card fee. An ATM withdraw fee of 50p does apply in the UK – or £1.50 internationally.
5. Travel credit cards – the best ones
Debit and credit cards are seen as convenient, but when you use them overseas there’s a risk of being stung by a host of charges and hidden fees without even realising.
That’s why you have to be very clever when choosing the right one – with some changing as much as 5% just to withdraw cash at an ATM.
Editor of Money.co.uk , Hannah Maundrell explains: “It is possible to get non-sterling transaction fee-free debit cards, however you’ll need to move bank accounts, which is why getting a credit card and using it right would be your better option.”
When picking the right credit card, make sure you have provisions in place to make sure you don’t miss any payments – aim to pay it off in full as soon as possible so you’re not charged interest.
“Also remember to check your chances of being accepted before you apply so you can see which you’re most likely to get – this will avoid any flags on your credit report.
“If you’re travelling outside of major cities then it can be better to go for Visa or MasterCard over an American Express.”
[“Source-smallbiztrends”]