With the pound not buying quite as many euros or dollars as it used to, here are some tips to get the best value for your holiday money.
1. Understanding the basics of travel money
The Bank of England exchange rates website gives you the latest interbank exchange rates. These are the rates at which the big banks exchange money among themselves. As a traveller, you’re not going to get a rate as good as this, but it gives you an idea of what the best possible rate is.
Because exchange rates involve two currencies, such as the pound against the euro, it can be a bit confusing as to whether a higher exchange rate is better or worse.
The easiest way to remember this is if you have the pound first, such as pounds to euros or pounds to US dollars, these days the exchange rate will start with a 1. Then, the higher the number, the better it is for you.
For example, with pounds to euros, 1.14 is better for you than 1.08.
With pounds to US dollars, 1.30 is better for you than 1.20.
2. Nobody knows the best time to buy!
If the exchange rate is low, you might be tempted to wait and see if it improves. It might get better, but it might get worse. Although foreign exchange rates tend to move in long-term trends, the truth is that nobody knows with certainty where it’s going—if they did, currency speculators would all be rich!
3. Buy half now and half later, and hedge your bets!
If you think there could be a meaningful change in the exchange rate between now and your holiday, you could buy half of your travel money now, and half closer to when you travel. In this way, you’ll get the average of the two rates.
But again, you don’t have a crystal ball, so this could work out better, or it could work out worse. You also have to consider any fees, commissions, or delivery charges when you’re making two transactions rather than one.
4. Buy your holiday money online in advance
Don’t buy your holiday money at the airport: the exchange rate you’ll get will be terrible.
If you’ve got a few days to spare before your holiday, use a currency comparison websiteto get the best deals.
If you’re in a hurry, eurochange gives decent rates, and if you order before 4pm you get next day delivery, which is free on orders of £600 or more. They also have 181 branchesthroughout Britain if you want to collect your currency.
5. Always pay abroad in local currency—never pay in pounds
When you’re abroad, if a cash machine, shop or restaurant asks you whether to pay in pounds or the local currency (such as euros), always pay in the local currency. Never pay in pounds.
If you pay in pounds, you’re at the mercy of the overseas merchant or bank, and their rates are going to be pretty bad.
6. Don’t withdraw cash on your credit card if you can help it
If you withdraw cash on a credit card, it will be noted on your credit report. This can look bad if you apply for a loan, credit card, or mortgage within the next few months: it looks to lenders like you might not have any cash in your bank account, forcing you to borrow at high rates on your credit card!
Credit cards often tend to charge fees for withdrawing cash too, so it can work out an expensive way to get travel money.
7. A quick sanity check to make sure you’re not being ripped off
These days, pounds, euros, and US dollars are all broadly similar in value. But sometimes when we see prices in a restaurant or a shop in a foreign currency, we’re not sure whether it’s a good deal or not.
When you’re buying something, ask yourself: if the same price was given in pounds, would it be a good deal? For example, if a meal in a restaurant is 20 euros, would it be good value if it was 20 pounds?
8. Keep your cash safe
Don’t forget to put extra cash in the safe in your hotel room, along with your passport.
Travel insurance will cover you for having your cash stolen, as long as you have taken sensible precautions. For example, our Go2 Travel Insurance will cover you for up to £500 of Personal Money (on a single-trip Gold policy), and so will our Europe Plus Platinum policy.