Top tips for travel money this summer
With the peak holiday season fast approaching and travellers keen to make every penny count, research from moneysupermarket.com shows people can save up to £9 in every £100 of currency depending how you access your holiday money. Taking time and planning ahead rather then trying to get last minute currency really can make a difference.
Bob Atkinson, travel expert at moneysupermarket.com, offers some useful dos and don'ts when buying and selling currency this summer:
Using Cash Abroad
The best exchange rates are available online for those who buy in advance rather than leaving it until the last minute and buying at the airport. For example, buying €1,000 in advance through Online FX would cost £892.46, while purchasing last minute through Travelex at Heathrow would cost £949.31 - a difference of £57.
To get the most bang from your buck, order cash online with free delivery and no commissions. If you can't do that, the Post Office or a high street travel agent should be your next best option, rather than your normal bank.
If you have no option but to pick up your currency at the airport, order in advance and pick up at the relevant bureau de change. Both Travelex and Thomas Cook offer this service.
Pre-paid Card
Pre-paid cards are another great option as 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. They can be topped up easily online or over the telephone.
The market leading pre-paid cards for use abroad are from FairFX and Caxton FX. The FairFX card charges for ATM use but has a favourable exchange rate while the CaxtonFX card has no charges.
Debit Cards
Using a debit card abroad is one of the easiest ways of accessing your money abroad or making purchases. However, use the wrong card and it could cost you.
If you plan to use your debit card abroad, know what the charges are before you go. Many banks impose a minimum charge, typically £2-£3 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 Gold Classic account would cost £870.91 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 £40 extra.
Credit Cards
Like debit cards, many credit cards have fees and charges for use outside of the UK, with fees of up to £45 based on five transactions of €200. Use the Halifax Clarity Credit Card or the Santander Zero Credit Card and €1,000 would cost just £870.91 as these cards have no charges for use abroad.
Most credit cards designed for overseas using may come with no ATM fees, but you will still be charged interest from the day you make the withdrawal. The exception is the Sainsbury's Gold Card which offers an interest free period on cash withdrawals, as long as you pay off the transaction in full at the end of the month.
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 £4.
If you are using a pre-paid card, you can hold money on these card for two years, so it may be worth holding any leftover money on these cards for future trips.
Alternatively sell your spare currency back to friends and relatives heading to the same destination at the rate you bought it for - this will ensure you do not lose out.
Bob Atkinson, travel expert at moneysupermarket.com said: "Brits who invest a little time in researching the best options before going on holiday will come up trumps in making the most of their money while away. It's all about getting the right mix of cash, pre-paid cards and credit cards to make your money go as far as you are travelling.
"A recent moneysupermarket.com poll showed one in five of us are looking for the best deals for overseas spending when selecting a new credit card, but how many of us actually do have the right piece of plastic in our wallets and purses?
"A card such as the Sainsbury's Gold Credit Card allows fee free overseas transactions and is the only credit card that has as free overseas ATM withdrawals. It uses the standard rates for exchange meaning you get a great deal for your use overseas and you won't pay interest on your cash withdrawals if you pay off your bill in full at the end of the month. And despite the monthly fee of £5, you do get annual family travel insurance as part of the deal.
"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 nasty surprise when you realise how much most card issuers charge for you using your card on holiday.
"It may take a little extra time to search for the best deal available, but consumers should get into the habit of shopping around to get the most for their travel money, just as they do for everything else they buy."