Deciding how to manage your spending on holiday has become increasingly complex due to the wide array of options available. From credit cards and challenger banks to traveller’s cheques and the traditional airport kiosk, it’s hard to know the best approach.
Here we explain the advantages and drawbacks of each method and the steps you should take to make sure you’re getting a good deal.
What is a good deal?
You need to find the best exchange rate with the lowest additional charges, like delivery fees, to get a good deal.
Compare the best travel money rates onlineand in-store to find which company will give you the most cash in total.
But remember, taking travel money with you is not the only way to spend abroad so make sure youexplore all your optionsbefore your trip.
Compare the fees, charges and exchange rates from currency providers to the rates you’ll pay with prepaid, debit and credit cards.
What are the costs?
Currency exchange involves several different charges such as:
Exchange rates
This shows how much foreign currency you can get in exchange for your money.
Travel money providers buy foreign currency at its wholesale price and sell it to you at a profit. That is why there are so many different exchange rates.
The higher the number you can find, the better the exchange rate. For instance, if you want to convert GBP to EURO and see a rate of £1 for €1.20, that is better than £1 for €1.18 and worse than £1 for €1.24.
Commission charges
Travel money providers take these charges for administering your order.
The charge is normally incorporated into the rate, so although many companies advertise 0% commission, they could still be charging you by offering a less competitive exchange rate instead.
Delivery costs
Delivery charges may apply if you buy your travel money online or over the phone. The cost varies. Some companies offer free delivery to your home address while others offer free delivery for collection from a branch or airport.
Credit card charges
If you buy foreign currency with your credit card you will be charged:
On your credit card— buying foreign currency is treated as a cash withdrawal. This means you will incur a cash advance fee and daily interest charges.
By the travel money company— most charge a transaction fee of up to 3% for using your credit card to pay for your currency.
How should you buy travel money?
Ordering travel money online and in-store, have different pros and cons:
Can you order in advance?
Yes, this is known as pre-ordering, and it means you:
Avoid delivery charges by picking up the currency in store
Need to allow plenty of time for arrival
Advanced planning gives you time to weigh up the pros and cons of the different travel money options, including online cash orders and travel money cards.
If time is tight, read ourlast-minute travel guideto find out what your options are.
Top tips for getting the best deal
Focus on the overall cost: do not just look for the highest exchange rate, because you could find a lower rate is better overall if there are no commission and delivery charges.
Do not use your credit card: use your debit card or simply swap your sterling cash into your chosen currency to avoid excessive credit card charges.
Avoid cheap tricks: do not be swayed by companies offering 0% commission on travel money as this applies to almost every travel money company.
Prepare in advance:shop aroundfor travel money well before your trip so you can compare deals and make the most of free delivery options which take longer to arrive.
Remember your card: if you have a debit card, credit card or prepaid card that does not charge you to spend or withdraw cash abroad, it might pay to wait until you get to your destination and simply withdraw your foreign currency from a cash machine.
