How to get the best deals on foreign currency
1st Jan 2015 Managing your Money
With the pound worth less against the US dollar and the Euro and other currencies than it has been in the past, it’s important to get the best deal on your holiday money.
Finding the best rates
You need to find the most competitive rate and lowest commission for buying currency—and the worst place to change money is usually your departure or arrival airport where it can cost you up to 10% more than the cheapest online deal.
Do your research and shop around well before your departure date. By finding the best deal you will ensure that your spending money goes further.
Read more: The ultimate summer holiday checklist
Currency: what to look for
- When you are looking for currency deals, check both the exchange rate (how many euros you get for your pounds, for example) and the commission rate—usually expressed as a percentage of the value of the money you are changing.
- Sometimes the exchange rate looks very competitive until you realise you’ll be paying a hefty commission rate for the privilege.
- You can now compare rates online, and have the currency sent directly to your house.
- If you buy in advance, you can opt for standard delivery which is often free
Check out rates from
- Fair FX
- Moneycorp
- Travelex
- Post Office Money. With Post Office Money you can choose US dollars or Euros and collect them within two hours from your local Post Office using the Express Click & Collect service. The minimum order is £400 and the maximum is £2,500 and the service is only available for these two currencies.
- You can also check out a range of providers by using MyTravelMoney which is a comparison site where you input your requirements and it gives you six best buy deals.
Top tip: Your money is not protected when it is held by a Bureau de change and so it is best to order your currency for immediate delivery. Although it is unlikely that it would go bust, you would potentially lose any money deposited with them if it did.
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Credit and debit cards—what to look for
Before you set off on holiday it’s also a good idea to work out the best method to pay for goods and services overseas. There is a choice of cash, credit cards, debit cards, prepaid cards and travellers cheques.
Anyone using a credit or debit card should, if possible, look for one that does not levy additional charges on transactions in foreign currencies as these can be hefty if you use the wrong card.
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What will your card charge you?
You can check the fees for using your credit card from information on the back of your monthly statement, on the travel money website of your card issuer or by contacting the customer helpline.
When you have booked your holiday, consider applying for a card specifically for travel which does not charge foreign exchange or ATM fees.
Some credit cards do not charge fees for overseas transactions, and these include
- Halifax Clarity card
- Post Office Classic MasterCard
The Halifax Clarity credit card is free to use anywhere worldwide. There is no cash withdrawal fee although local ATM providers may charge a fee. Make sure you select this particular card if you are going abroad, as other Halifax cards make charges.
The Post Office Platinum Card charges no fees on purchases overseas and 0% interest on balance transfers for 22 months with no balance transfer fee.
Top tip: Say ‘No’ to Dynamic Currency Conversion. When you come to pay in a shop, you may be asked whether you want to pay in the local currency (eg euros) or sterling.
If you pay by card, ensure the transaction is conducted in the local currency rather than sterling. The practice known as dynamic currency conversion allows customers to pay for goods and services in their own home currency. However, the exchange rate is often less favourable than that offered through their credit or debit card.
Prepaid cards
If you're worried about taking large amounts of cash or travellers cheques on holiday then you could consider using a prepaid card for some of your holiday spending.
You can compare cards on moneysupermarket.com. Avoid prepaid cards that charge monthly fees and look carefully at the charges for loading money onto the card. Some expire within a set time so check the terms and conditions.
Linking your debit or credit card to a mobile wallet
Travelex has a payment card which you link to your existing credit or debit cards.
There are no fees or charges, and no markup on the MasterCard wholesale exchange rate. You can link it to up to five of your own UK debit or credit cards using an app. Spending appears as a domestic payment, so there are no foreign usage fees. There is, however, an ATM withdrawal fee of 2.99% when used abroad.
At home, Travelex charges 1 per cent plus £1 per transaction for ATM withdrawals, purchases and e-commerce, so it is best to use it just for when you are outside the UK.
