It’s one month until Easter and if you’re planning to make the most of the long weekend or the school holidays with a trip abroad be sure to also make the most of your travel money purchase.
The fall in the value of sterling since the Brexit vote last June has made foreign holidays more expensive. The price of February half-term ski breaks was up nearly 12 per cent on average, according to M&S Bank. And while £1 would have got you €1.27 a year ago through the currency exchange and money transfer website xe.com, yesterday that had fallen to just €1.14 – a reduction of more than 10 per cent. But if you’re smart when it comes to buying travel money, you could claw back some of your spending power. Here’s how to make your pounds go further.
Don’t buy currency at the airport: leave it until the last minute and you’ll be at the mercy of a bureau de change that knows it’s got you over a barrel. It will land you with a lousy exchange rate that could only be marginally improved if you pre-booked it online a couple of days before your arrival at the airport. Even then, it might slap on a collection fee. ‘Airport bureaux often offer less competitive rates and may not have a wide variety of note denominations,’ warns Paul Stokes, head of products at M&S Bank.
Beware of 0 per cent commission deals on the high street: bureaux de change that try to hook you in with this type of deal will usually be making money by giving you an inferior exchange rate. So you could be better off opting for a bureau that charges commission but offers a better rate. To work out how competitive a deal is (inclusive of any fees, including credit card fees) do your research by getting an indicative exchange rate from a specialist currency website, such as xe.com or travelex.co.uk.
Avoid using your debit card abroad: chances are your debit card will hit you with a range of charges if you dare to spend on it while on holiday. First off it will likely impose a typical charge of 3 per cent for a non-sterling transaction and will then come at you with a charge for making cash withdrawals as well as billing you up to £1.50 every time you use the card to pay in a foreign shop. Moneysavingexpert.co.uk goes as far to label the following debit cards as ‘cards from hell’ for foreign usage: Halifax; IF (Intelligent Finance); Santander; Bank of Scotland; Lloyds; TSB; Clydesdale/Yorkshire; RBS; and NatWest.
Apply for a specialist travel credit card: these are usually the cheapest way to spend overseas because they don’t charge foreign usage or ATM withdrawal fees. Instead they charge interest on your balance so make sure to pay in full when your statement is due and you’ll escape the charges that would be levied on a normal credit or debit card. However, in the case of withdrawals, interest is usually charged immediately meaning you’ll have to pay interest even if you pay off your card balance in full when your statement is due. The exception to this rule is the Barclaycard Platinum Travel Card, which is waiving immediate interest on withdrawals until August 2018. Using a credit card abroad also provides you with powerful consumer rights protection under Section 75 of the Consumer Rights Act. On purchases between £100 and £30,000, if anything goes wrong your credit card company becomes liable and has to reimburse you.
Consider a pre-paid debit card: this is the modern version of travellers’ cheques. You can load the card with more than one foreign currency before you travel, locking in the exchange rate at the time you pre-pay and potentially benefiting from lower rates when you come to use the card. And like specialist travel credit cards, they don’t charge foreign usage fees. However, you do have to pay upfront for some prepay cards themselves and exchange rates vary greatly between providers.
Laura Whitcombe is knowledge and product editor at ThisisMoney.co.uk.