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25th April 2017
Holidays are the time to relax, unwind and explore your chosen destination. However, if you’re lucky enough to be heading abroad this year, don’t forget to do your research on currency exchange rates before you go. With so much fluctuation in the pound recently, your holiday could end up costing you more than you expect, especially if you’re heading to Europe. For example, spending in euros could cost you up to 30-40% more than it did in Spring 2015.
To get the most bang for your buck when it comes to your holiday money, follow our top tips to help keep your holiday both fun and affordable.
Convenience Will Probably Cost You
It can be very convenient to get hold of foreign currencies at your local Post Office, local provider or even at the airport. Beware though, you’re could be trading off cost for that convenience. Just because somewhere has ‘0% commission’ doesn’t mean you’re getting the best deal or rate of exchange. As a rule, if you’re turning up at a counter asking for a foreign currency, you’ll probably be able to find better deals elsewhere.
Some service providers that we recommend include Transferwise, Monzo and the Travelex Money App, but they all have different purposes and benefits.
Get Market Rate Currency
If you’re looking to transfer money to a currency account overseas, Transferwise is an incredibly convenient and cost-effective option. It is an application that you download to your mobile phone, where you make payments directly through the app.
They tell you what rate you’ll be receiving before you send, so it’s super easy to compare rates with other providers. In fact, they claim that they send payments at the ‘market rate’ with no extra mark-up, and that sending through their app ‘is up to 8x cheaper’ than sending payments through your bank. Impressive stuff.
Avoid Charges Abroad
Monzo is a banking app with a difference, and has been making waves in the industry. From the point of saving money on currency abroad, however, their ‘zero charges for spending abroad’ policy is worth noting. If you have a Monzo card, you can use it overseas as you would a debit card here in the UK and not pay any fees. Not to mention their forward-thinking setup and ‘real-time balance’ which helps you keep better track of your finances in real time. Handy!
Order Money in Advance
The Travelex App is a really convenient way to quickly access different currencies, compare exchange rates before you buy, and pick up your money at a local Travelex counter or even have it posted to your home. They also have a handy in-app budgeting tool which helps you figure out how much money you’ll need on your trip. So you won’t be exchanging too little currency and running out or too much currency and having loads left over that you can’t use. This will avoid you resorting to more expensive ‘quick fix’ currency exchanges should you run out, or having foreign currency sat collecting dust when you get home.
Keep an Eye on the Market
Travelex also have a Rate Tracker which will send you alerts when the currency you’re interested in reaches a favourable rate. You can receive either daily or weekly alerts, up until your chosen date. This way you can be a little more strategic with when you buy your currency of choice.
Use Your Card Abroad?
You could even find that using your regular card abroad could end up giving you a better deal than getting currency exchanged at an expensive dealer – just check what charges and rates your bank offer for using your card abroad at both a store and at an ATM. Rather than a last minute deal at a currency exchange desk at the airport, you might be better off just withdrawing the amount of money that you need from a cash machine when you’re out there. Just be sure to check what the charges will be before you travel inform your bank of your plans before you go, and ask if you have a daily withdrawal limit - you don't want to get caught out!
Chip and PIN Currency Conversions
When paying Chip and PIN, you will be given the option to pay in either GBP (sterling) or in the local currency. Paying in Sterling will mean that the currency conversion is done by the merchant or ATM provider using their own exchange rate, which can vary hugely, and will most likely differ from the Visa or MasterCard exchange rate. We advise that you download a currency exchange app which will give you a quick indication of whether the conversion they have offered at the Chip and PIN is favourable.
However, according to RBS, it is often more expensive to pay in Sterling than the local currency as there could be a local charge. However, by paying in Sterling, you should avoid any Non-Sterling Transaction Fees. So it's a good idea to check if your bank issue these, and how much they may be.
In short, a little bit of preparation could save you significant amounts when you’re exchanging your pounds. And with the pound much weaker than in previous months, it’s more essential than ever to make the most of your pennies – after all, you’d no doubt rather spend that money on a refreshing drink at the poolside or a family meal out.