After saving those hard earned pennies for that dream holiday, it’s important to make sure your spending money stretches as far as possible. That’s why it’s important to understand travel money and how you can get the highest amount of foreign currency to make your holiday spending money go that little bit further.
We tend to plan ahead when it comes to booking our holidays – and spend the time in between dreaming of the white sandy beaches and summer sun – but this doesn’t appear to be the case when it comes to buying our foreign currency.
Many admit to leaving it till the last minute, buying it in the airport or sourcing it at the holiday resort. If you want to capitalise on the best offers though, it’s important to source your travel money early on.
So what do you need to know when it comes to the topic of buying foreign currency?
Commission
Most companies will charge a commission fee for changing your money into foreign currency and it’s important to understand what forms these fees will come in.
You will usually find that you’ll either be charged on a minimum charge or flat fee basis. A minimum charge can make it expensive to change a small amount of money as the fee could be a relatively large percentage of your total.
A flat fee is better when you’re exchanging larger amounts of money as it will not alter depending on how much you change. Along with these charges you may find the travel money company charges a handling fee for carrying out the exchange.
Some currency exchange companies and banks offer a commission free service but you’ll usually find that their exchange rate is lower making it a false economy. As with any transaction, it’s always best to shop around to make sure you get the largest amount of foreign currency for your money.
Where to go
You shouldn’t be short of options when it comes to where to get your foreign currency; many banks and building society’s offer this service and you’ll find that the bigger travel agents are able to do this in store for you too.
The Post office also offer competitive currency exchange and there are also online stores who will deliver the currency to your door (be aware of delivery charges with this service).
Travel insurance
It’s important to remember to purchase a comprehensive travel insurance policy when you travel to make sure you are covered should you lose your foreign currency or have it stolen. This will also protect your belongings and pay out in the event of a cancellation or an accident needing emergency treatment.
That just about covers the basics of where to source your travel money from and how to avoid paying over the odds, but what alternatives are there to simply purchasing travel money? Let’s take a look below:
Traveller’s Cheques
Traveller’s cheques were introduced as a way to make carrying money abroad more secure. After buying the cheques in the UK you need to sign each one and then sign it again in front of the cashier when you cash them in.
The advantage is that If they are lost or stolen you can report it and have the cheque cancelled, receiving a replacement quickly and efficiently. For many years traveller’s cheques have been the favourite method for purchasing holiday money but there are disadvantages. You will still usually be charged a commission fee when you cash them in and you’re also likely to encounter a handling fee.
Credit Cards
Another more secure way of managing your holiday spending money, credit cards will allow you to control your spending and not have to change a large sum of money into foreign currency.
With a signature or chip & pin for added security and the ability to have fraudulent transactions dealt with should your card be stolen, this can be a preferred option for many.
The downside is that you may be charged a cash withdrawal fee if you take currency out of a cash machine, could be charged a fee by the shop for using it to pay and may incur interest charges.
Pre-paid Cards
An increasingly popular method of payment abroad, a pre-paid credit or debit card allows you to load money using cash, an online transfer or from another card and use this to pay for your goods abroad.
This offers more safety than a standard credit or debit card as you can control how much money is available and you’ll still need to use a pin or signature when you spend with it. As with a credit card, should the card be stolen or lost, you can report this and have it cancelled and you’ll also be covered for fraudulent activity with most cards.
You’ll still find there are downsides even to this method of managing foreign your spending money, which include: a fee for applying to the card initially, cash machine withdrawal fees and a possible charge for topping the card up.
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