Where are the best exchange rates?
Travellers who simply purchase their currency at the airport will end up spending far more than they need to. Research has found that you would pay £52 more for €1,000 at Heathrow airport than if you ordered the same amount from the cheapest online retailer. The best exchange rates are available online and it's possible to order cash the night before the flight, collect it at the airport the next day and still save money. One thing to watch out for is that exchange rates are separate from commission charges, meaning even a "commission-free" provider may not be offering the best deal.
What are the alternatives to cash?
You can obviously use a credit or debit card. You'll benefit from a competitive exchange rate but most cards will charge an overseas' conversion fee of 2.50% to 3.00%. It is still possible to buy traveller's cheques although you may get stung twice by commission – once when you buy the cheques and again when you exchange it.
Another option which is becoming increasingly popular is a prepaid card.
What is a prepaid card?
Prepaid cards can be used in the same way as a debit or credit card – most are Visa or MasterCards so they are widely accepted. The concept is similar to a pay-as-you-go mobile phone in that you load money onto the card and can then spend on it until the funds have been used or you top it up again. If you opt for a dollar or euro prepaid card, your money is exchanged at the time you load your card. However, some providers offer global cards where your money is held in sterling and converted when you make a transaction.
What do prepaid cards charge?
Some have an initial set-up cost, others levy a fee for each transaction, while others charge when the holder makes a withdrawal from an ATM.