Travel Money: Our Money Saving Tips

More and more of us are paying high prices to change our hard-earned cash into foreign currency at the last minute - but you don't have to pay the price at the bureau. This article will help you make the most of your money and will show you the cheapest ways to splash the cash abroad by examining foreign currency, plastic (credit cards and prepaid cards) and travellers cheques

To skip directly to a particular part of this article use the quick links:

• Currency conversions
• Cheque mate
• Give me credit
• The new plastic power
• Card users beware: dynamic currency conversion
• Moneysupermarket.com recommends...

Currency conversions

So has foreign currency been surpassed in favour of cards? The answer is generally, yes. If you have the right card you will almost certainly save money when compared to exchanging your Sterling for foreign currency. However, for some, any forms of cards, whether it is a credit card with charges or the new breed of prepaid cards, are off-putting and of course the wrong card can carry risks. Cash is also the easiest to use but, at the same time, is the easiest to lose or have stolen so don't take more than your travel insurance covers. In those cases, exchanging money is probably right for you – but still make sure you're getting the best deal.

Don't assume that a sign saying 'commission free' automatically means you're going to get a great rate. In actual fact you should be very wary of 'commission free' offers because the chances are that you will be offered a worse exchange rate than the bureau itself receives, allowing them to make profit that way. The only way to tell is to ask how many euros/dollars, etc, you will get in exchange for your pounds. Simple as that!

Some companies don't have commission charges – so if their exchange rate is competitive they are worth a look. However, don't rule out those that do charge commission, as their rates can still be more competitive.

Be wary however, of flat fees and minimum charges. Minimum charges make it difficult to change small amounts of money but flat fees can offer good value if you are changing larger sums of money. Watch out for handling fees too, which are normally about £3 but can be higher. Also consider your own bank or building society as they might have preferential rates for their account holders.

On the moneysupermarket.com forum we're often asked about who offers the best rates. As rates change constantly that's almost impossible to answer, and there's no one bureau that is consistently ahead of the rest.

Cheque Mate

Option two is the trusty travellers cheque, which is certainly one of the most secure methods of carrying your money abroad. Indeed that’s the overriding advantage of travellers cheques because as long as you make a note of the cheque number or make a photocopy (and don't lose that too!) you can travel with peace of mind.

The downside however, is that they're not always the cheapest way to carry your money abroad. In fact expenses can mount up as you are usually charged commission when you buy Sterling cheques and an exchange rate is applied when you exchange them into local currency. Once again, shopping around for the best deal becomes crucial.

With foreign currency travellers cheques those who think ahead, get ahead. Keep an eye on the exchange rate and look to transfer funds potentially well ahead of time. If you find a good rate, capitalise on it – and if you think the rate is going to drop further then why not play safe and change half your money? Also look out for good deals. Some providers may offer free commission, especially for students.

Deals that don't charge commission won't automatically be the best deals – you have to check their exchange rate and make sure it is competitive. Also be aware that when cashing in cheques abroad you are likely to face an additional charge (normally an extra couple of pounds) – so try and take your cheques in larger amounts, as it will cost the same to cash-in £100 as it will cost to cash-in £10.

As with foreign currency, exchange rates for foreign currency travellers cheques constantly change so shop around and take a thorough look at the market before deciding on the right option for you.

Give me credit

The new plastic power

Prepaid cards are the alternative way to pay abroad. The advantages of prepaid cards are numerous as they offer increased safety and, if you're buying online or on the phone and your card is used fraudulently you will be able to get your money back. Furthermore, there is no debt risk as you control the funds you place on the card, and prepaid cards are more accessible – you can get a prepaid card without having to worry about your credit history.

From a travel perspective, there are numerous advantages to prepaid cards. Safety is again a key feature because if you lose your prepaid card, you can contact your provider and they will cancel your lost or stolen card and issue a replacement. Additionally, depending on the provider, you can use a prepaid card worldwide and some providers will even offer 0% foreign exchange fees.

So what's the downside? Unfortunately, with prepaid cards being a relatively new phenomenon the market isn't too competitive just yet (though it is expanding). Consequently, there are still a lot of fees to be wary of such as card application fees, ATM withdrawal fees (which is often higher overseas) and charges for top-ups. However, more prepaid cards are emerging which drives these fees down, and, additionally, there are prepaid cards designed specifically for travel which limit overseas costs such as spending overseas, ATM withdrawals, etc.

It's also important to consider HOW you can top up. Some prepaid cards will only allow you to top up face-to-face, while others give you the chance to top-up face-to-face, on the phone or on the internet. When travelling it is crucial to think about how you can top up your card overseas - face-to-face is instantly ruled out and phone calls are often difficult to make, so look for a prepaid card that allows you top-up over the internet.

Again, take a complete look at the market before opting for the right card for you. Moneysupermarket.com now offers a prepaid card comparison tool, which will compare the best deals instantly.

Card users beware: dynamic currency conversion

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