Should you buy your euros now?

The escalating crisis in the eurozone has resulted in the pound going from strength to strength, with it recently hitting a three and a half year high against the euro.

Therefore, if you are planning on jetting off to the continent any time soon, you’ll reap the benefits and can expect to enjoy almost 10% more when exchanging your holiday money then this time last year.

But, for those of us not lucky enough to be getting away till later in the year, should we dash out and take advantage of the strong exchange rate while we have the chance –or hang fire? We take a look…

When to buy your euros

An uncertainty about how long the pound is going to continue strengthening means there is no definitive answer on the best time to purchase your euros.

It is possible that if the eurozone crisis deepens, the pound could grow even stronger meaning that waiting could be your best bet.

If you are prepared to take a risk, then chances are you’ll come out on top – but there are no guarantees.  Be aware that taking this route would be a gamble.

A possible solution could be to buy half your euros now, and the rest nearer the time. That way, you’ll know for definite that you are getting a good rate on at least half your cash now, with the potential to get an even better rate later on.

Bob Atkinson, travel expert at MoneySupermarket.com said: “With sterling currently performing strongly against many foreign currencies, including the Euro, if you have spare cash, now is a great time to take advantage of these rates and give yourself more bang for your buck when travelling abroad.

“There are no guarantees that the rate won’t improve further or even come crashing down as rates have done in the past, so it is a gamble.

However, for those who don’t want to take the risk, buying some euro’s now and the rest closer to your trip could be beneficial.”

Where to get your currency

Whether you decide to buy your euro’s now or sit tight, where you purchase your euros from will have an impact on the price you pay.

The best rates can be found online, and many companies will deliver free of charge once you have bought a certain amount.

Take a look at TravelSupermarket’s travel money channel to find the best exchange rates. You’ll be able to compare the best online prices and make sure you’re getting the most for your money.

Companies such as ICE, ICICI Bank and the Post Office often have competitive rates.  ICICI currently has an additional offer of a free 12 month tastecard when you purchase £500 or more of travel money.

This entitles you to 50% off at more than 2,500 restaurants and would normally cost up to £70 a year. You’ll have to hurry though – this offer runs out on May 31 2012.

If you find yourself short of time because you’re dashing around organising the kids or buying last minute sun cream, all is not lost.

You can still make sure you get a better rate at the airport by pre-ordering your money before you go. Leaving it till you get there though will cost you – you are likely to have to pay sky high commission and the difference can be as much as 10%.

Consider a pre-paid card

Getting a pre-paid card can be a great way to budget your spending money when on holiday. It’s so easy when you’re relaxed and enjoying the sun to be more frivolous than usual, only to find when you  return home a nasty credit card bill is waiting on the doormat.

However, using a pre-paid card can help. You simply purchase and load it with the amount you want to spend, and if you run out you simply top up online or over the phone.

It is protected by a pin number which can give you peace of mind against the eventualities of the card being lost or stolen with an added advantage being that you don’t have to carry a wad of money on you.

However, it’s still advisable to carry some money on you for small purchases such as taxi fares or toll roads and while most places do accept pre-paid cards, there will be some exceptions. 

They are issued by Mastercard and Visa, so as long as it’s somewhere that credit and debit cards are accepted, you’ll be able to use them.

MoneySupermarket’s prepaid cards channel will give you a number of options.

Look out for cards with the most competitive exchange rate and no set-up or purchase fees. And if you can’t get fee-free ATM withdrawals, keep your eyes peeled for the lowest ones.

The FairFX Euro Currency Card Special, which offers competitive exchange rates, will pay £5 cashback to MoneySupermarket customers who load £500 or more on to their card. You will also get free card delivery of the card when you load an initial minimum of £50 (or €60) upfront. ATM fees are €1.50

Look also at My Travel Cash - euro prepaid card. This doesn’t charge ATM fees, while MoneySupermarket customers will receive 1% cashback on all purchases made with the card. For orders over €800 euro you will get free express delivery, otherwise there is a charge of €6.

Using your credit card abroad

Don’t be tempted to take your usual credit card away with you without first checking whether or not you will be charged for purchases and withdrawals.

While they can be handy, the foreign usage fees charged by most providers make it a very expensive form of spending.

You can avoid this by applying for a credit card specifically designed for overseas usage which will support your spending while away.

For example, the Nationwide Building Society credit card allows you to earn a certain amount of fee-free spending abroad as you spend on the card in the UK.

However, even if you don’t use the card that much while on home soil, it still has one of the lowest commission charges at 2%. It has a 0% foreign purchase fee and 0% on purchases for six months. The representative annual percentage rate (APR)  charged by this card is 15.9%.     

Another option worth considering is the Post Office Platinum card. While it has a slightly higher representative APR at 16.9%, a big advantage is that there is no commission charged on purchases made abroad.

Another perk is that the card comes with free purchase protection against accidental loss, damage or theft of almost everything paid for with your card for up to 90 days after you've made a purchase

This extra cover will give you peace of mind while on your travels.

So, whether you buy your euros now or take a gamble, the key to planning your holiday budget is to be savvy so you get the most for your money.

Getting organised and having it as a high priority on your holiday ‘to do’ list will mean you have that bit more to play with – and let’s face it, that’s something none of us should say no to.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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