Packing for a holiday can be a pretty stressful experience, and especially as the departure day draws near. But whatever you do, don’t leave sorting your currency until the last minute, as if you buy your money at the airport, the exchange rates are usually the least competitive.
Instead, set aside a few minutes to order your currency in advance. The most competitive rates tend to be online, and you may find you can even book over the internet, and then pick up money from the airport.
Another trick to watch out for is deals which claim to be “0 per cent commission” or “commission-free” as while these may sound attractive, you need to look beyond the marketing hype at the exchange rate you’re actually getting. If not, you could find you end up paying through the “hidden fee” in the rate.
The key is to check the small print and do your sums, remembering to include any handling charges and delivery costs. Once you arrive at your destination, you need to play your cards right, or you could get stung by a range of fees. Most credit and debit cards will automatically add a foreign usage fee or conversion charge of between 2.75 per cent and 2.99 per cent. On top of this, some debit cards will also charge you a set fee for each purchase transaction you make of up to £1.50.
Also note that if you take money out of an ATM, it will cost between 2.5 per cent and 3 per cent of the amount you withdraw. One way to avoid getting stung repeatedly is by trying not to make lots of small withdrawals or purchases of £10 or £20; another option is to pay in cash instead.
If you’re a regular traveller, it may be worth applying for a card that does not levy fees for foreign usage. Debit cards that do not charge include cards from Metro Bank, and those that come with the Gold Classic current account from Norwich & Peterborough building society. Credit cards that do not charge include the Halifax Clarity as well as cards from the Post Office, Saga and Metro Bank. The Gold card from Sainsbury’s is also free for purchases and withdrawals, but there is a £5 monthly fee. That said, the card includes comprehensive multi-trip family travel insurance.
Also bear in mind that when using a credit card for goods worth £100 or more, you benefit from the extra security offered under Section 75 of the Consumer Credit Act. This means foreign transactions will be covered if the company goes bust or if you have a dispute regarding non-arrival or damaged goods; similar protection is offered by Visa debit cards.
When using either a debit or credit card abroad, keep an eye out for a practice known as “dynamic currency conversion.” This is where you are given the option of paying for goods and services in either sterling or local currency.
While this may sound tempting – as you’ll know exactly how much you’re spending – as a general rule, you should choose to pay in the local currency. This is because the foreign exchange rate will be determined by the retailer, and will often be less favourable than your card provider’s rate.
A further option worth considering is a prepaid card from the likes of Fair FX, Caxton FX and Travelex. With these cards, you load the money before leaving the UK, allowing you to lock into a favourable exchange rate.
Although you can get more specialist currency cards, the majority are in either euros, US dollars or pounds sterling, and can often by obtained without any commission. The cards can then be used to withdraw money from a cash machine, or to make purchases from retailers in shops using a PIN. As the cards are pre-loaded, you can’t spend money that you don’t have – making it easier to budget.
Another benefit of travelling with a prepaid card is that if you lose it, you have the security of knowing it can be replaced and that your money is not lost. If you’re heading overseas, avoid relying on a single payment method such as foreign cash or a single debit card; a combination of cards and currency will give you back-up if something goes wrong.
Finally, if you plan on using your debit or credit card, call your card issuer to tell them where and when you are going, as this will prevent your provider from thinking the card has been stolen, and blocking all transactions.