Many of us can only afford to travel abroad once a year (or every two years) and so making sure you get the best possible deal when exchanging your hard-earned cash into foreign currency is a major key.
Cash, prepaid or credit cards? There are many ways of spending money abroad but spend it the wrong way, and you could be wasting £s every time you hit the store. Here’s how you can get the most out of your money abroad.
Take some cash with you in the local currency when travelling – it’s almost certain that at some point you would need to pay for a taxi or buy food at a local shop that doesn’t accept cards. Rules and regulations on how much money you can take in a country vary so make sure to check before you travel, as you might need to declare it at customs.
The amount of foreign currency you get in return for your pounds will depend on the exchange rate currently being offered in the market. Generally, the higher the exchange rate is the more foreign cash you’ll get for your money.
Usually, foreign exchange companies will take a commission fee, which you need to take into account when searching for a good deal. Be aware of minimum charges, especially if you’re converting a relatively small sum. Ideally, you would want to find a company with low/no commission fees but that still offers a competitive rate.
Exchange rates change constantly, so it’s best to monitor them and strike while the rate is hot.
Where to buy:
• Post Office
• Bureau de change
• Foreign exchange services
• Supermarkets like ASDA money and Sainsbury’s bank
Prepaid holiday cards
Prepaid cards are very similar to gift cards, where you load money onto them and spend until the balance reaches zero, or you can top it up again using cash, bank transfer or a credit card.
There’s no credit facility on a prepaid card, so you can only spend what’s pre-loaded onto it. Some cards allow you to load them up with foreign currency and won’t charge a fee when using overseas.
Below are the top three prepaid cards.
When needing cash locally the cheapest and easiest way is withdrawing cash from an ATM using your debit card. You will normally be charged a fee (typically 1.5-2%). It is more efficient to withdraw the limit of currency from the cash machine for the day if you require the funds, as you’ll be usually charged for each visit to the cash machine.
It may not always be a good idea to use your card for purchases. Some banks now charge each time you use your card to buy things abroad.
Below are the top three debit cards to use abroad
Do you make major purchases while travelling? If so, then a credit card may be the best option for you to pay for things abroad if you take the right card and use it sensibly. Take the wrong type of credit card and your holiday could turn out to be very expensive.
While a credit card might offer an interest-free period on spending, it might not be your best option as it may impose fees and charges for use overseas. Loading or foreign exchange fees apply each time you use your card, plus there are charges when you use it to withdraw cash from an ATM.
Nevertheless, there are cards out there that are designed for overseas use that either don’t charge fees or charge less than an everyday credit card would. They also offer competitive exchange rates and are more secure than cash. If you lose a credit card you can contact the card issuer and have it cancelled.
Below are the top three credit cards.