Holidaymakers hit by weak pound
The pound has fallen by 7.2% against the Euro over the last year costing someone with a £500 cash budget €50 when travelling to mainland Europe.
The pound has also fallen significantly against the dollar, due to interest hikes in the States which are yet to be followed by the Bank of England. Someone transferring £500 into US dollars will now receive around $700, while this time last year they would have got $740.
If you’re looking to buy in the near term, Asda Travel Money is running a rate sale until Friday, offering discounts on all the currencies it sells.
The supermarket-based currency exchange says people buying currency through its rate sale will receive around €15 more than they would with M&S Bank during the rate sale.
However, that doesn’t mean it’s going to be the cheapest place to get your travel money. Use TravelMoneyMax.com to find the best deal. Currency providers only make a small margin on currency sales, so Asda’s actual discount isn’t that big, giving an extra €3 or so compared to the rates it normally offers.
Is there a better way to get travel money?
It’s possible to get even better exchange rates by picking a travel-friendly debit or credit card. These specialist cards don’t charge for people to spend or withdraw cash abroad (though you’ll be charged interest if you draw cash on a credit card).
Plus, the exchange rates are better than you’ll find in a Bureaux de Change too, mirroring the exchange rates set by Mastercard or Visa, with no sneaky surcharges.
Buyers can also load currency onto a prepaid card, locking in their rate, which could make people’s holiday money go further if the Pound falls further against the Euro in the run up to the EU / Brexit referendum on 23 June.
See our guide to the Best cards for overseas spending.
The difference between two currencies; specifically how much one currency is worth relative to each other. For example, if £1 is worth $1.50, converting sterling to US dollars, the exchange rate is 1.5. Converting dollars to sterling at those levels, the exchange rate is 0.66, so $1 is worth 66p. There are a wide variety of factors that influence the exchange rate, such as a country’s interest rates, inflation, and the state of politics and the economy in that country.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.