By Adrian Lowery
Updated:
Travellers’ annoyance at getting bad deals on foreign currency and overseas card charges tends to rise as the pound’s exchange rate falls.
With sterling on the slide this year against the euro, dollar and a host of other currencies, British holidaymakers will be looking for ways to maximise the spending power of their holiday pounds - especially with finances tight at home.
There are a number of ways to make sure you get as good a return as possible when spending your sterling.
Savvy shopping: Avoid debit and credit cards fees on withdrawals or transactions with a specialist holiday card
1. Cash is not quite king – but it’s not bad, especially if you live in London
Competition among specialist online and high street forex providers means there are some good rates around if you want to buy currency before you leave. Online comparison tools like this one can be used to find who is offering the best rates on any one day.
The best rates are always offered by London providers for collection: 500 euros can today be obtained from Moneycorp for £434.33 at a rate of €1.151 to the pound, not far below the forex market rate of €1.158.
Rates outside London are less good, with Travelex’s airport collection service offering €1.130 (£442.48) and Asda just a fraction less at €1.129.
Delivery rates are similar, but the comparison is clouded by delivery charges, which all providers charge on small amounts but waive at a variety of levels. For 500 euros, Saga comes out top with a rate of €1.130 (£442.48) and no delivery charge.
However, given the risks of carrying large amounts of currency, some might prefer a prepaid card (see 4 below).
BEST FOR INDIA: THE ICICI RUPEE CARD
This card allows you to load up with rupees before travel and withdraw fee-free from any ICICI cash machine in India. Even withdrawals from other ATMs incur only a small fee.
Officially visitors are not allowed to take rupees into India, so the card circumvents that problem.
But even if one were tempted to stuff some notes in the suitcase, the rates ICICI offer for loading, at only 1.5-2.0 Rs below the market forex rate, easily beat those offered anywhere on the high street. The best online rate for London collection today is 78Rs to the pound, while ICICI’s loading rate is 81, against a market rate of 83.
The card however closes after 170 days so regular travellers cannot hold balances indefinitely.
2. Be careful using your current debit and credit cards
The chances are your debit and credit cards will suffer from both fees charged on each withdrawal or transaction and a loaded exchange rate.
The current accounts offered by Norwich & Peterborough and Metro Bank are best for overseas usage, charging no loading and no fees, but it’s probably not worth switching to them unless you are a very frequent traveller or fed up with your current provider. It could also be tricky to maintain them as a second account.
Some credit cards are better than others but there is one that stands out, so if you are going to get one, get the following specialist holiday card...
3. Consider getting a Halifax Clarity Card
You get a near-perfect exchange rate and are charged no fees with this card, making it the cheapest way to spend abroad – as long as you pay your bill in full at the end of the month to avoid interest charges.
If you are going to pay off your holiday credit card bill over several months, a 0 per cent spending will probably be better.
The Clarity card also has no fees for ATM withdrawals, but interest will be charged immediately at the card’s standard rate of 12.9 per cent. Still, if travellers pay off their balance promptly, this will work out cheaper than withdrawals with most debit cards. Unfortunately it is not permitted to preload the card with a credit balance for this purpose.
4. Consider a pre-paid card
For dollars and euros, pre-paid cards – which you load with currency before travelling then use as a debit card abroad – mean you don’t have to carry around large amounts of cash.
Rates are good but not outstanding and some carry charges. ICE’s new Travellers Cash Card is completely fee-free, and is offering €1.128 today against the market rate of €1.158. FairFX offers a slightly better rate at €1.133 but you will be charged for ATM withdrawals.
Those visiting India should definitely consider the ICICI bank rupee card (see above). And for people who think they can read currency market movements, pre-paid cards also allow you to buy your currency early if you expect sterling to weaken.
- Deal alert: This is Money has partnered with FairFX to offer you a free currency exchange card worth £9.95.
5. Three DON’Ts
- Don’t get money at the airport - unless it’s pre-paid for collection at Travelex.
- Don’t ‘pay in pounds’: always opt for paying in euros if an ATM or chip and pin sets gives you the option.
- Don’t pay for your holiday cash at a UK bureaux by credit card: it will be treated like a cash withdrawal, with fees and immediate interest.
£100 BECOMES £16: HOW BAD BUREAU RATES EAT AWAY AT CASH VALUE
Traveller Mike Perham last year set off on an epic road trip around the globe.
Foreign currency specialist World First* gave the 20-year-old £100 in cash and asked him to change it into the local currency at the first bureau de change he could find on entering each new country.
The picture below shows Mike with the £16 that remained once he had returned to the UK.
*World First offers foreign exchange services to small and medium sized business and large money transfers for those buying property abroad. It does not have a retail forex service.
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