How to get a good deal on foreign currency
Going on a holiday abroad often begins with finding the best value flights, hotel and travel insurance, but what about the spending money you take with you? Although it can be quite straightforward to take money to the bureau de change at the airport and get it exchanged into the correct currency, ever-changing exchange rates mean that you may not be getting the most out of your cash this way.
In this guide, we reveal our top tips on how to get a good deal on foreign currency so that you aren’t caught out.
Watch exchange rates
As we have already mentioned, exchange rates are always fluctuating. In fact, they are known to change daily. This is due to many factors to do with global economics, such as interest rates, the stock market, political uncertainty (exacerbated in recent times by Brexit and the Ukraine-Russia war) and employment figures.
This is why we recommend keeping an eye on exchange rates well in advance, ideally a month or longer before you jet off. If you buy when the rate is high and the pound is at its strongest, you will get the most foreign currency for sterling. It’s impossible to know when the best time to buy is, but regularly checking forecasting sites or your local Post Office for the latest exchange rates increases your chances of buying when the pound is good.
Check you're getting the right currency
Perhaps our most important tip is to check before you travel that you are getting the right currency. This may seem like glaringly obvious advice, but it's a common pitfall for holidaymakers. For example, don’t just assume that a country in Europe uses the Euro, and double-check that old notes you have from a previous holiday are still legal tender. If you accidentally get the wrong currency, you will have to exchange it again against other rates, which will most likely result in less money in your pocket.
So, you’ve been checking exchange rates for a while and the pound’s sell rate is high. Where should you get your foreign currency from? The frustrating aspect is that different providers will have different rates. MoneySavingExpert has a useful comparison tool for this called Travel Money Max, which can help you to decide.
It’s also important to remember that many companies will try to lure you in with claims like “guaranteed best rates” or “0% commission”. They are ultimately trying to gain your business, so this may be misleading - do your own research rather than fall for it.
Another piece of advice is not to wait until you get to the airport, as this is where the exchange rate is lowest. Foreign banks and hotels abroad also have typically poor rates. Keeping an eye on exchange rates and getting your cash in advance will ensure you get the best deal.
Consider buying online
Exchanging cash in person at a high street retailer is one way to get your foreign currency, but you could be missing out on a good deal if you don’t look online first. In fact, many foreign exchange providers do offer better rates on the internet. If you take our advice and plan ahead, you will have ample time to order cash online to pick up in-store or get delivered straight to your door through the post. This works via a credit or debit card transaction online and is completely secure. Again, Travel Money Max can help with comparing online exchange rates so that you get the most per pound.
Don't forget about credit card fees
It's worth remembering before you use your credit card to purchase foreign money at a bureau de change, that some credit card companies charge fees for this. Check your provider's terms and conditions to find out if this is the case. Fees usually start at around £1.50, which isn’t extortionate but does eat into your funds. It can be cheaper to get your pound notes from a hole-in-the-wall first and take these to be converted instead of using a credit card.
Check with your provider before using your bank cards abroad
Instead of buying cash to use abroad, you may be considering just taking your debit card and using it as you would in the UK. We advise against this because there is usually a fee for using cards abroad and you may be subject to the dynamic currency conversion rate if you are charged in sterling. To avoid the dynamic currency conversion rate, always ask to pay in local currency if you have to use your card.
Having said this, some card providers have no foreign transaction fees and low interest on withdrawals abroad, so again, check with your provider first. You may even consider switching banks if you travel a lot and find that your credit card could be helping you more when it comes to accessing travel money.
Overall, it's often a lot simpler to use foreign notes and coins - this way, you know exactly what you are paying with no hidden fees.
Opt for pre-paid cards
However, if you are nervous about carrying around physical cash, especially after becoming so accustomed to contactless payment because of the pandemic, you may also consider a pre-paid card as a simpler option. These work by locking the exchange rate at the price it was the day you bought the card.
You then load the card with money before you set off, using it as if it was a credit or debit card. This means that the exchange rate change doesn’t affect your money when you're on holiday, so you can spend knowing exactly how much money you have without having to carry around lots of cash. There is often a purchase cost and there may be hidden charges, so don’t ignore the fine print, but these are a great option for peace of mind.
To conclude, then, there are many ways you can get your hands on foreign currency, but to get the best deal, you will have to put some time and effort into working out the best option for you.