Make your money travel further this summer
With many Brits jetting off abroad in the coming weeks, holiday makers will no doubt welcome the news that the sterling is now at a three and a half year high against the euro. Yet analysis from MoneySupermarket shows people can make their money stretch even further and save up to £9 in every £100 of currency simply by planning ahead and shopping around rather than leaving it until the last minute.
Bob Atkinson, travel expert at MoneySupermarket, offers some useful tips when buying and selling currency this summer:
Planning Cash Abroad
Go online to get the best exchange rates available as well as free delivery and no commission, rather than last minute buying at the airport. For example, buying €1,000 in advance through provider Best Foreign Exchange would cost £787.72, while purchasing last minute through Travelex at Heathrow for example would cost £864.15 - a substantial difference of £76.43.
If you're unable to order online, then the Post Office or a high street travel agent should be your next best option to shop around, rather than your normal bank.
If you have no option but to pick up currency at the airport, then make sure you order it in advance with both Travelex and Thomas Cook offering this service, with same day collection at the airport. Booking currency online secures the online rate and avoids any commission charges.
Pre-paid Cards
Pre-paid cards can be a great alternative to cash, and many of the leading products have no charges for use abroad both on purchases and ATM use. They are free to take out and have no running costs. Unlike cash, should your card be stolen the funds will be protected and they can be topped up easily online or over the telephone if you run out of funds.
The market leading pre-paid cards for use abroad are from providers CaxtonFX and FairFX. The CaxtonFX Global Traveller currency card has no charges for ATM or purchases abroad.
Credit Cards
Some credit and debit cards should only be used abroad in an emergency unless they are specifically for using abroad, as fees and charges can be incurred for use outside of the UK. Recent research from MoneySupermarket found that 57 per cent of Brits using a credit card abroad didn't know there may be additional charges as well as transaction fees and interest. By using the Halifax Clarity Credit Card or the Sainsbury's Gold Credit Card, €1,000 would cost just £784.56 as these cards have no charges for use abroad, however the Sainsbury's Gold Card does come with a £5 per month fee.
Most credit cards designed for overseas usage may come with no ATM fees, but you will still be charged interest from the day you make the withdrawal. The exception is Sainsbury's Gold Credit Card which charges no interest on ATM withdrawals if the balance is paid in full at the end of the month and there are no ATM withdrawal or foreign exchange fees (although the card does have the £5 monthly fee).
Another thing to look out for when using your card abroad is when retailers offer to convert the card transaction into sterling at point of sale, a practice known as dynamic currency conversion. It is best not to opt for this as retailers generally offer unfavourable rates of exchange compared to those on a credit, debit or prepaid card.
Debit Cards
If you plan to use your debit card abroad, know what the charges are before you go. Many banks impose a minimum charge, typically £1.00 on each transaction, so try not to make lots of small transactions as the charges will soon mount up.
If you are a frequent traveller then consider opening a bank account with a debit card that doesn't charge any foreign usage fees. For example, using the Norwich & Peterborough BS Gold Classic account would cost £777.02 based on five transactions of €200 as the card has no transaction, ATM or purchase fees. Use a card which charges fees and you could pay up to £53 extra.
Selling left over currency or exchanging everything back
If you have money left over from your holiday, exchanging it back can be costly. Buy back rates are usually far lower than the selling rate.
Some providers, such as Travelex and Thomson/First Choice retail shops offer a guaranteed buy back rate at the price you bought the currency, usually for a typical fee of £3.99.
You can hold money on pre-paid cards for two years, so it may be worth holding any leftover amounts on these cards for future trips.
Alternatively, you could sell your spare travel money back to friends and relatives needing the same currency for the rate you bought it for.Bob Atkinson, travel expert at MoneySupermarket.com said: "Investing a little time to research the best options ahead of travelling will ensure you cash in and make the most of your travel money.
"If you are planning to take out a card specifically to use abroad, plan ahead and don't leave it until the last minute as you have to allow at least ten working days to receive the card from the date of application. You can quickly and easily compare features and benefits of a range of debit cards using MoneySupermarket.
"Don't use any of your cards overseas without knowing what the charges are. If you are the type of person who never checks your statement, you could be in for a hefty bill on the doormat when your return."