Best ways to spend money abroad: our money saving tips

Key takeaways

• The amount of foreign currency you get depends on the exchange rate, a higher rate means you’ll get more for your money

• Buy travel money when the exchange rate is high to maximise spending power and monitor currency trends as rates fluctuate

• When you’re abroad always try to pay in local currency to avoid conversion charges

What is currency exchange?

The amount of foreign currency you get in return for your money will depend on the exchange rate being offered by the converter at the time.

Exchange rates change all the time, but the higher the exchange rate, the more money you’ll get when you change your money.

Using credit cards abroad

Credit cards are a popular choice for travellers due to their convenience and wide acceptance. A travel credit card abroad works just like it does back home; you have a set credit limit and can use the card for purchases up to that amount. They usually offer special rates when you use them abroad and some come with no fees – compared to standard debit and credit cards where you may be charged for each transaction or withdrawal.

Advantages of credit cards

• They often offer great money exchange rates

• Some travel credit cards are fee-free

• Using them responsibly can improve your credit score

• They are more secure than carrying cash; if lost or stolen, cards can be blocked

Drawbacks of credit cards

• You may encounter foreign usage charges

• Cash withdrawals can attract interest and impact your credit score

• A charge of around 3% may be applied to the amount you spend on the card

• Unless you clear the balance of the card you’ll pay interest on anything owed and if you miss payments your credit score can be harmed

Using prepaid cards abroad

For those who prefer to stick to a budget, prepaid cards are an excellent option. These cards are loaded with money in advance and used like a regular card abroad, circumventing foreign exchange fees. Moreover, the exchange rate is locked on the day the card is loaded, not when it's used.

Advantages of prepaid cards

• They are among the cheapest options for spending abroad

• Can help with budgeting

• No risk of getting into debt as you can only spend what’s loaded on the card

• No credit checks so can be handy if you have a less-than-perfect credit score

Drawbacks of Prepaid Cards

• Fees apply and may apply for applications, top ups, spending or inactivity

• Despite their benefits, some cards still incur transaction fees overseas

• Not all cards will be accepted for all transactions

• There may be more benefits, or cheaper fees, with a basic debit card

Using travellers’ cheques abroad

Although they were once a popular way to spend money abroad, travellers’ cheques are not widely available anymore and can only be bought at select currency exchanges. They used to be available to buy at banks and Post Offices but most have stopped selling new travellers’ cheques and instead offer prepaid cards or cash exchange services.

Advantages of travellers’ cheques

• They are one of the safest ways to carry money

• If lost or unused, they can be refunded

Drawbacks of travellers’ cheques

• They are being replaced with other methods so it’s rare to find places to buy or exchange them

• They come with commission charges and less favourable exchange rates

• Converting cheques into currency incurs a flat fee

When do you buy your holiday money?

To get the best rate possible for your holiday money, you want to exchange your pounds when the exchange rate is in your favour. Although this is impossible to predict, if you buy a prepaid card you can often choose to set the rate when you load the card or when you make transactions on it. When it comes to cash, keeping an eye on exchange rates is key and also being aware of extra fees which might be thrown in by providers.

Exchanging money just before you go, at the airport for example, is usually one of the most expensive methods as airport providers often add on extra fees which eat into your holiday money.

Remember that currency exchange offices have their own limits on travel money purchases, and carrying more than €10,000 in cash requires a customs declaration.

Thing to consider

When spending money overseas, there are a few key points to keep in mind:

• Check if your existing bank accounts offer good deals on foreign debit card use

• Ideally, load prepaid cards with a debit card to avoid additional fees

• Always opt to pay in the local currency to avoid conversion charges

• Factor in commissions from foreign exchange companies when comparing rates

Compare travel money

Whether you choose to purchase travel money at your local bureau de change or are considering a travel credit card - it’s a good idea to keep an eye out for the best offers available on our comparison tool and compare travel money.

We compare the best currency exchange rates on offer, to get you the best rates for your money.

Currency comparison is easy - simply pop to our currency conversion comparison and lock in the best rate when you see it.

For the best travel credit cards, simply tell us a few things about yourself including your financial situation and preferences and we’ll provide you with a tailored list of options to benefit from so you can compare cards easily.