Get a good deal on your travel money
The pound continues to look weak against the euro, meaning holidaymakers heading to the eurozone this May bank holiday or summer may end up spending over the odds.
We are all used to shopping around for the best deals on flights and accommodation before heading off on our travels, but many people cancel out these savings by failing to get a good deal on foreign currency. So whether you are heading to the eurozone for your holidays or not, these simple travel money tips should ensure your cash goes further.
1. It is generally cheaper to use a credit or debit card than buying currency or travellers cheques. Based on a holiday spend of £500, moneysupermarket.com found that you’d be £45 better off using a Nationwide credit or debit card than buying currency from Thomas Cook.
2. Cards offer a better exchange rate than cash because banks use the wholesale Visa or Mastercard rate, which is more competitive than normal foreign exchange services. However, many cards charge a foreign loading fee of up to 3%, which can eat into this saving. Nationwide cards and the Post Office’s Classic Mastercard do not charge a foreign loading fee.
3. Unfortunately, if you wish to use your card to withdraw cash when you are on your holidays then you will be charged a fee – normally around 2% to 3%. It is therefore worth trying to limit the withdrawals you make, although the downside of this is that you might be left carrying around large amounts of money.
4. Another cost to be aware of is dynamic currency conversion (DCC), as this can leave holidaymakers seriously out of pocket. When you use your card to make a payment or withdraw cash you are given the choice to pay at your own bank’s foreign exchange rate or in sterling but at a rate determined by the retailer or foreign bank. The difference can vary from a few pence to a few pounds, and this can quickly add up over the course of a holiday.
5. So, if you would prefer to take cash, then look at both the exchange rate and commission charge at Bureau de Change. Many advertise commission-free currency, but recoup this by taking a greater margin on the exchange rate. The most competitive and consistent rates are available at the Post Office, Marks & Spencer and Travelex.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.