I must admit for my next holiday I am in rather a favourable position. Yes, as I come to you with this column I will be sunning myself quietly by a pool in Cape Town. And while I chill out, my money will be working for me.
Some destination tips
Right now, things could be better with the pound. Since the EU referendum in June 2016, it has languished somewhat.
But that doesn’t mean you can’t find destinations that let your money stretch further.
Firstly, there’s my favourite, Cape Town. The Rand hit a five-year high of R15.51 against the pound in March 2017. Now, though, the exchange rate is markedly better at R19.45 (at the time of writing).
The most monumental dropper, for the Tango lover, is the Argentine Peso. A year ago, the Peso sat around ARS$22.70. Since then, it has lost a colossal amount of value and now sits around ARS$48.86.
Even New Zealand is getting cheaper. Twelve months ago, it was NZ$1.85. Now you’ll get NZ$2.03. That might not look like much but represents a 9.7% drop in value against the pound.
Don’t let the plastic spoil your tan
Looking for countries where your money will go further is all well and good, but the benefit is limited if you then overpay for accessing your holiday money.
One of these debit cards can be a good option
Starling Bank charges zero fees for spending or cash withdrawals worldwide. It also has a handy app, which you can use to block your card if you lose it and communicate with customer support if you need help.
These apps will help you stick to a budget and give you zero fees
You can get your hands on a card by opening a current account in the app. It doesn’t do a full credit check, so won’t affect your rating if you don’t request an overdraft.
Starling will exchange your money at the Mastercard rate, so you’ll get near the true rate when you use your money abroad.
Another top pick is Monzo. Like Starling, it has a snazzy app with in-built security and customer service. The benefit of this is two-fold. These apps will give you up-to-date notifications of your spending on your phone, helping you stick to your budget, while they do the job of giving you holiday money with zero fees.
Monzo also gives fee-free spending on debit cards worldwide. However, it is more restricted with cash withdrawals, only allowing £200 fee free every 30 days. Above this, the bank will charge you 3% on cash withdrawals. Like Starling, it uses the Mastercard rate to exchange your currency. Another benefit of these cards is they are both UK-regulated current account providers, so your money is protected by the Financial Services Compensation Scheme (FSCS) by up to £85,000.
Revolut is another option to consider. Revolut offers currency exchange at the ‘interbank’ rate, which is the rate that banks offer each other, even better than the Mastercard rate, and yonks better than what you’ll get at a Bureau de Change. Revolut, like Monzo, offers fee-free card spending, and fee-free cash up to £200 a month.
There are a couple of caveats with Revolut, however. It is not a licensed UK bank so therefore your money is not protected by FSCS deposit insurance. It also charges a mark-up at weekends on the exchange rate of 0.5% to 1% depending on the currency, so better to take out cash Monday to Friday to avoid those charges.
To get a hold of any of these cards, just download their respective apps on iOS or Android.
Starling Bank Current Account
Fee-free worldwide spending on debit card and cash withdrawals, this product has little in the way of drawbacks, offering the Mastercard exchange rate on all currency transactions. It comes with a handy app to manage spending and digitally control your card.