Guide to Travel Money and Foreign Exchange – 1/6
With so many bargain deals to choose from, foreign travel has never been more
cost-effective so why, when it comes to travel money and foreign exchange, are
we content to lose sizable amounts just for the privilege of spending our cash
overseas?
Instead of planning ahead we end up buying our foreign currency in our lunch
hour the day before we travel. However, with some forward thinking we can
capitalise on the best foreign currency exchange rates and find an alternative
to carrying cash in our wallet. Read our guide to travel money and foreign
currency so you know what your options are and how to capitalise on them.
Of course it's always an option to change your money at an airport, train or
ferry terminal. However, these venues often offer the least competitive rate
and even running out to the local Post Office or bank during your lunch break
won't necessarily secure you a great deal.
Instead you need to look at the bigger picture - and broadly, this means that
if you're spending money abroad you should consider foreign exchange,
travellers cheques, debit cards, credit cards or prepaid cards. We'll look at
the pros and cons of each of these options later in this guide.
Be wary of commission – free or not
Some companies charge commission for carrying out the foreign exchange. This
will generally range from £1.25-£3.00. This usually comes in two
forms:
-
Minimum Charges
- These can make it very expensive to change small amounts of money.
-
Flat fee
- These can offer good value if you are planning to change larger amounts of
money as the fee does not alter no matter how much you are changing.
-
Handling fees
- This is the money the currency seller charges to carry out the exchange.
However, be wary of 'commission free' offers, as these do not always provide
better value for money. It is often the case that the currency seller will make
up for the loss of commission with a higher exchange rate (often much higher
than they receive from the bureau). This means the deal can work out worse for
you, while allowing the company to make more profit.
Also consider the 'buy-back' rate. If you're likely to bring a fair amount of
cash home with you, then see if the outlet you buy your currency from will buy
back for free. This will stop you paying out twice.
So how can you know which is the best deal with all this to take into
consideration? The answer is to ask how much of your chosen currency you will
get, after all charges, in exchange for your pounds. Find the currency
converter that will give you the most and you're good to go.
One thing to remember…
Cash might be convenient when taking money abroad; however, it is not very
secure. That’s why it’s important to take out
travel insurance
and not take any more cash than your policy covers. Otherwise, if you lose it
or it is stolen, your cash is gone for good.
So now you know what to look out for, where should you go to change your money?
In part two we'll also examine travellers cheques.
