Make the most of improved exchange rate by limiting charges

The pound is moving higher against the dollar and the euro but travellers must still work hard to stretch their pounds overseas as high bank charges wipe out most the gains, says Caxton FX, the leading foreign exchange broker.

Since the turn of the year, the value of the pound against the dollar and the euro has slowly but steadily climbed back from the bottom. In the last week, the pound has moved above psychologically significant $1.50 rate and today hit a four-month high, closer to its long term average of £1.70. Overseas travel is beginning to look affordable again.

However, travellers will find it hard to buy and sell their pounds at anywhere near these rates as banks have recently widened the spread at which they will deal with consumers. This week at Victoria Station in London, when the interbank rate was $1.52, you could only buy the dollar at $1.47 and buy pounds at $1.58 and the rates at the airports are usually even less competitive.

"Travellers need to be careful to ensure that they see the benefit from the rise in the pound," says Rupert Lee Browne, Chief Executive of Caxton FX. "Our prepaid currency cards can be loaded at the most competitive rates available in the market, backed by our best rate guarantee, and are free of transaction or commission fees on top.They can be used in the same way as a credit or debit card."

The number of banks that charge customers for using their debit cards overseas has doubled to almost 17 in the past year and the cost of using cards abroad has also risen lifting lenders' earnings from these transactions to 745 million a year.