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
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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
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
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.
Option two is the trusty
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
A lot of providers will have special travel credit cards purposefully targeting
the frequent flyer with points and other loyalty rewards. Of course these
bonuses are great but the fees and the interest rate should always be your
first consideration if you intend to use your card abroad and also if you plan
to borrow. With that in mind it's often a good idea to have a credit card just
for using when overseas – and that can be paid off in full each month.
If you have a credit card then watch out for immediate interest charges,
particularly for cash withdrawals. These incur interest when your balance is
not repaid in full. In general it's best to avoid using a credit card to
withdraw cash abroad, as you would at home.
Despite the potential charges, if you shop around there are some fantastic
credit cards to use overseas which don't carry loading charges and have low ATM
One of the crucial advantages of a credit card is that there are a host of cards
with 0% on purchases for as much as 12 months. This will allow you to make
purchases without being stung by interest charges - but do be wary to make sure
you are not being hit with a loading fee, and make sure there are no
restrictions on overseas purchases. Also, the majority of credit card providers
will supply a free replacement card. So if you misplace your credit card or it
is stolen, contact your credit card company and they will send you a
replacement. This offers a level of security that simply isn't available with
Post Office Classic – The Post Office Classic card is one of the leading credit cards to use at home and abroad with its typical rate of 14.9%APR. Where this card comes into its own for travellers however, is that it is commission free for use abroad. There is an introductory offer for purchases of 0% p.a. fixed for three months and an introductory offer for balance transfers of 0% p.a. fixed for eight months. In addition, there is a 24hr service available so if you do misplace your card whether at home or abroad you can call the emergency contact number and receive a replacement card for no charge.
Make sure you shop around to find the card with the best rates
The new plastic power
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
Merchants and retailers overseas might offer you something called 'dynamic
currency conversion'. This means they charge you in Sterling (or for overseas
readers, whatever your currency may be) rather than the currency of the country
you're travelling in. This can be convenient and gives you a familiar
perspective of the price you're paying - but you will normally be hit with a
higher exchange rate for this service so never use it and always CHECK before
signing anything or entering your PIN - they might not always ask! So if you
see a conversion, make sure you ask to be billed in the local currency.
So with all these alternatives what do we suggest you do? Well generally, we'd
say opt for a credit card or travel currency card as your main source of travel money, when
travelling abroad. Choose one that doesn't charge loading fees. Currently the
Post Office comes out on top in the credit card category with no commission charge for use abroad.
If you can't be
bothered applying for a new card then do not use them for cash withdrawals
unless you really need to. That is why we also suggest taking cash with you for
small ticket items - such as buying drinks and for transport. Change your cash
before you travel and be sure to shop around to get the best exchange rates. As
a back up, for security, you might also consider travellers cheques and
prepaid cards in case of emergencies. Good luck and enjoy your trip!