Don't relax when it comes to your holiday money
Watch for large transaction fees, high commission charges and poor exchange rates, says Chiara Cavaglieri
Sunday 04 July 2010
The schools are soon to break up and the dash to find a last-minute cheap break in the sun is on. With the pound's recent bounce back against the troubled euro you would think that all is hunky-dory for UK holidaymakers this summer.
But with some travel currency providers still paying low rates and others charging bumper fees, it's as important as ever to shop around for foreign cash.
Organising your holiday money can end up costing you dearly in fees, but there are ways to get more bang for your pound. Spending can quickly get out of hand, but if you take the time to compare rates and watch out for any pitfalls, you can start your holiday on the right foot.
Many people take at least some, if not all, of their travel money as cash, leaving the cards for emergencies. The golden rule to taking cash is never to exchange your money at the airport. The convenience of a last-minute exchange of notes doesn't come cheap. With no competition, airport brueaux de change can be expected to offer poor rates while taking high commissions. That doesn't mean the high street is your best bet either; claims of commission-free currency may sound appealing but you can often get better value for money from online providers such as Travelex, ICE (International Currency Exchange), Best Foreign Exchange and Thomas Exchange Global.
"With the continuing weakening pound, it's really crucial holidaymakers take advantage of competitive deals rather than leave it to the last minute. Rates for cash at airports vary but aren't always competitive as it's a captive audience," says Joanna Williams from ICE.
Not only can you compare rates quickly and easily online, but you can also expect better rates because these providers have fewer overheads. Travelex, for example, has an online guarantee that it will offer the best price on foreign currency. You will, however, need to factor in the cost of delivery. Many offer free delivery if you're changing more than £500 but if you order less you may have to fork out upwards of £4. Travelex offers another option by allowing you to order your currency online then pick it from your local bureau de change for free. Similarly, if you do choose to use high street services such as the Post Office they have higher rates for changing over £500 than under. The difference can be as high as 3 percentage points.
When it comes to credit and debit cards, using the wrong one can be a costly mistake. Fees and charges can see your holiday spending rocket if you're not careful. There are four different charges to be aware of; loading fees on the exchange rate of about 2.75 per cent, spending fees on debit cards (for example Halifax adds £1.50 per transaction), cash withdrawal charges and, finally, some providers also charge interest from the day of cash withdrawals.
Both Virgin and NatWest, for example, charge its credit card customers 3 per cent for ATM withdrawals and charge interest on withdrawals at a massive 27.9 per cent.
Picking the right plastic is crucial. For debit cards, Nationwide's Flexaccount Visa is a good bet with no fees attached to it at all for European spending. However, you will need a Nationwide current account to get it and there is a 1 per cent loading fee outside of Europe. For credit card use abroad there are several attractive deals to choose from, including the Santander Zero card which has no loading anywhere and won't charge you for withdrawing cash, although there is still a 27.9 per cent interest rate to pay so it's still wise to avoid withdrawals unless it's an emergency. People over the age of 50 can get a Saga card, which has no loading fee anywhere, and although it charges 2 per cent for ATM withdrawals, there is no interest charged if you repay it in full.
A useful alternative to credit cards are prepaid travel money cards which can be both a cheaper and safer way to take money abroad. These can be used as you would a normal credit card except you have to preload them with cash in another currency. The vast majority of these are free to purchase and don't charge for foreign transactions (steer clear of those that do), but you will still need to compare exchange rates and watch out for loading fees. It's also important to avoid using the card to make a purchase in a different currency to the one it is issued in. "It's a really flexible means of carrying money and you don't need ID to cash funds. Best of all it is very secure as it is not linked to your bank account and can be quickly replaced if lost or stolen," says Sarah Munro, the head of travel money at the Post Office.
Among the best prepaid cards is the Caxton FX which has no transaction fees, no annual fee and no charge for withdrawing cash from an ATM. The FairFX prepaid card is another good option, as it is free to top up by debit card or bank transfer and has no spending or loading fees.
Other foreign currency products worth considering are good old travellers' cheques which are still going strong. Each cheque has a unique ID so if it gets stolen or goes missing, you can quickly get a replacement. As with cash, these will be expensive to buy at the airport and exchange bureaux often charge you to cash them abroad.
"Travellers' cheques were always a good safe bet as they could be replaced if lost or stolen, have security in that only you can cash them and have flexibility in that many places, especially the US, will allow you to use them as cash. However, all of these benefits are usurped by prepaid cards," says Bob Atkinson, a travel expert at comparison site Moneysupermarket.com. "My recommendation is to use TCs only as a final back up – use prepaid cards instead and a well-chosen credit or debit card as your first back-up."
Finally, it's important to be aware of some of the less obvious pitfalls such as dynamic currency conversion (DCC), when you're asked whether you want to pay in the local currency or in sterling when paying for a service or taking out money from an ATM. If you choose to pay in sterling the retailer converts your payment, not the card provider, charging you about 4 per cent for the pleasure. Therefore, it's usually best to opt to pay in the local currency as, although your bank may also charge a foreign currency fee, it's likely to be nearer the slightly less painful 2.75 per cent mark.
Bob Atkinson, Moneysupermarket
'Customers need to understand their money when they travel abroad and not just expect that they have a decent deal however they go about getting their currency or spending. Most people are ignorant of commissions and charges and have no idea how much using their cards overseas is costing them as many don't even check their statements when they get back.'
- 1 Edward Heath 'raped 12 year-old boy at Mayfair flat'
- 2 London is the most googled city in the world
- 3 Porn block in India: hundreds of sexual websites banned, internet outraged
- 4 Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
- 5 Richard Dawkins ridicules Sabrina Corgatelli for claiming her giraffe kill was 'ethical'
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...
Day In a Page
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.