Consuming Issues: Don't be left short-exchanged on foreign currency

So, you're withdrawing a wad of notes from the cashpoint machine, when someone snatches the last £50 note. You may chase after them. Or call the police.

Why should you take any less care when getting foreign currency? According to the Post Office, the average Briton changes £529 for a summer holiday. Poor exchange rates and credit card charges could snaffle almost £50 of that.

Following a few tips will make more of your holiday kitty: order currency online and collect it, and beware that credit cards can skim 5 per cent off transactions.

First, changing your money. On a recent trip to Europe, I was surprised at the claim made by a friend that the biggest airport money-changer, Travelex, was good value. It isn't, though more competitive rates are available from its website.

Generally, ordering online and collecting currency in person is much cheaper than handing over a tranche of money at the airport, or elsewhere, on the basis of my research last week on changing £500 for euros.

The best rate was 575 euros at two small bureaux de change, Best Exchange and Thomas Exchange, which have a few outlets in London.

With 300 kiosks around the country, No1 Currency offered 566 euros and, in an impressive exception to the online rule, paid the same rate for impromptu visits to its branches, many of which are in other shops.

The Post Office offered 564 euros for collection of online orders, and, for unannounced visitors to 8,700 branches, 542 euros (about £20 less).

Next best was Marks & Spencer, which offered 553 (although you have to have an M&S card to order).

For online orders, Travelex paid 563 euros but, with no advance order, Travelex at Heathrow T4 paid just 530 euros, hitting travellers with an unimpressive exchange rate and 1.5 per cent commission.

A summary? The difference between the cheapest London bureau (575 euros) and Travelex Heathrow (530 euros) was 45 euros, or £40 – enough for a good meal out abroad.

Plastic can be handy for foreign trips, especially if you want to limit the amount of cash you are carrying to avoid theft or loss (although that risk can be diminished by storing some in luggage and some on your person).

Credit cards – though not debit cards – also give protection for faulty purchases costing more than £100.

But beware of hefty credit card charges, which are especially steep when you withdraw cash. According to banking experts Defaqto, the average credit card charges a 2.8 per cent foreign exchange fee for purchases abroad – more than £5 for every £200 slapped on plastic.

Cash withdrawals are even more expensive, attracting the 2.8 per cent foreign exchange fee and an extra cash-withdrawal charge averaging 2.76 per cent. This means that if you are withdrawing the equivalent of £200 in cash, the bank will pocket £10.

Some credit cards are significantly cheaper. The Post Office credit card and the Santander Zero credit card from Abbey (whose record on customer service is chequered) both have 0 per cent exchange fees for foreign purchases.

The Nationwide Building Society gold credit card and Saga's Platinum card waive fees for purchases on mainland Europe, but charge, respectively, 0.84 per cent and 1 per cent for other foreign transactions.

Debit cards are cheaper than most credit cards, while still being widely accepted overseas. The FairFX prepayment debit card can be pre-loaded for trips and has no commission and good exchange rates (£500 bought 576 euros, the best deal of all).

Current-account debit cards charge an average 2.2 per cent foreign exchange fee per transaction.

One other tip: Defaqto's banking analyst David Black advises against accepting a foreign retailer's offer to pay for goods in sterling: the exchange rate will be worse and the purchase will end up costing more. After all, there's no point funnelling money to financial providers when it could be used for your fun.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

newsVideo targets undecided voters
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
Evan Spiegel, the founder of Snapchat, dropped out of Stanford University just before graduation to develop his app
techAnd yes, it is quite a lot
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Calypso Developer

    £500 - £700 per day: Harrington Starr: Calypso Developer Calypso, J2SE, XML, ...

    IT Developer/Analyst

    £35000 - £36000 per annum + benefits: Ashdown Group: A market leading financia...

    Pricing Manager, Finance, Edinburgh, £250-350p/d

    £250 - £350 per annum + competitive: Orgtel: My client, a leading bank, is cur...

    Client Services Executive / Account Executive - SW London

    £23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

    Day In a Page

    Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

    Kate Bush shows a voice untroubled by time

    A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
    Robot sheepdog technology could be used to save people from burning buildings

    The science of herding is cracked

    Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
    Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

    This tyrant doesn’t rule

    It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
    Rachael Lander interview: From strung out to playing strings

    From strung out to playing strings

    Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
    The science of saturated fat: A big fat surprise about nutrition?

    A big fat surprise about nutrition?

    The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
    Emmys 2014 review: Can they genuinely compete with the Oscars

    Can they genuinely compete with the Oscars?

    The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
    On the road to nowhere: A Routemaster trip to remember

    On the road to nowhere

    A Routemaster trip to remember
    Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

    Hotel India

    Mumbai's Taj Mahal Palace leaves its darker days behind
    10 best pencil cases

    Back to school: 10 best pencil cases

    Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
    Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

    Arsenal know battle with Besiktas is a season-defining fixture

    Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
    Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

    Pete Jenson: A Different League

    Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
    This guitar riff has been voted greatest of all time

    The Greatest Guitar Riff of all time

    Whole Lotta Votes from Radio 2 listeners
    Britain’s superstar ballerina

    Britain’s superstar ballerina

    Alicia Markova danced... every night of the week and twice on Saturdays
    Berlin's Furrie invasion

    Berlin's Furrie invasion

    2000 fans attended Eurofeurence
    ‘It was a tidal wave of terror’

    ‘It was a tidal wave of terror’

    Driven to the edge by postpartum psychosis