The £ has been steadily falling against the € for the past 5 years.
With Brexit causing big dips and general uncertainties holding the pound back getting the most for your holiday money is now more important than ever.
Currency exchange can be confusing and the difference between getting a good deal and a bad one could easily be the price of a meal out, a few cocktails at sunset or even an entire night in an Airbnb.
So how do you get the best deals?
Cash is still the current favourite when it comes to buying currency. Consumer Intelligence recently reported that 94% of people still took cash on their last trip with 59% visiting a branch to get the currency face to face. However, change is afoot as the use of prepaid cards rose from 8% to 14% in a year.
When it comes to cash the first tip is to always avoid exchanging it at the airport. With no other options, the airport bureau de changes have you trapped. This leads to the worst rates possible and high commission fees on lower amounts. If you do have to get it at the airport try and pre-order 4 hours before.
If you are buying your travel money online or in person before you get to the airport use a comparison site to find the best deals and factor in any delivery costs and buy back rates.
Using Debit Cards Abroad
Debit cards often seem like the easiest, most convenient way to spend abroad. You don’t need to exchange any cash and you can only spend what you have which avoids getting into credit card debt. However, this option comes at its own peril, one that can cost you a significant amount of fees.
The majority of UK debit cards charge a “non-sterling transaction fee” of around 2.75% – 3%. So for every £500 you spend, you will pay an additional cost of £13.75-£15. But that is not all most of these providers also charge £1-£1.50 per transaction and if you think how many times you use your card over your week on holiday this adds up fast.
To make things even worse there are also fees to withdraw cash, this is usually 1.5%-2% or £1.50-£2. Either way, you lose out and end up with a lot less money for things you want to enjoy on your trip. Always avoid using your debit card abroad.
Travel Credit Cards
Credit cards are a better option as you can find specialist travel ones that offer no fees. Cards like Halifax Clarity and Barclays Platinum both have no spending or withdrawal fees but be wary, you are borrowing money. If you can’t pay off the amounts in full before the 0% interest period ends you will face 18.9-19.9% APR. This will quickly wipe any savings benefit from using a no-fee card. Use a comparison table to check which card is best for you.
Prepaid Travel Cards
This is one of the best ways to take money abroad.
You can top-up your card, exchange into your desired currency (locking in the rate) and then spend like a debit card. You won’t face any potential high-interest fees like credit cards and can avoid the spending and withdrawal fees you get with debit cards.
There are some downsides and ways not to use a prepaid card, things like hiring a car, automated petrol pumps, and motorway toll booths. For general spending, they are great and perfect for those trying to stick to a budget. When it comes to fees, rates, and costs prepaid cards can vary so shop around. WeSwap offers a free card, with free ATM withdrawals over £200, free-spending and low exchange fees. If you want to do an instant exchange it costs 2% and if you can wait 7 days it costs you just 1%. The rate is one of the best around, and with such low fees, you get a lot more currency to spend.
Most new currency cards come with free apps that help you manage your money, from here you can freeze the card if you temporarily lose it, see your transaction history, top-up the card and check your balance. These can be really handy to keep you on your daily budget.
Whichever method you prefer for your foreign currency remember there are good and bad options for each. Shop around, save, and use the extra money for a Pina Colada or two.