Grab holiday cash as sun shines on pound
You can benefit from the strong rate for sterling against the euro by buying your travel money now or getting a pre-paid card, reports Emma Lunn
Sunday 06 May 2012
With the pound strengthening against the euro, now might be a good time for Brits to lock into a good rate ahead of their summer holiday.
Current retail rates are seeing £1 buy between €€1.18 and €1.20 savvy consumers could invest early and make the most of good exchange rates ahead of holidays this summer. The two main ways of doing so are buying currency or loading cash onto a pre-paid card.
If you're buying currency, make sure you shop around. For those about to jet off on a spring break be aware that airport bureaux de change tend to offer the worst rates.
Figures from foreign exchange specialist Moneycorp show that on 2 May you could get an average of€€548 for £500 by using a walk-up service at an airport. However, if you planned ahead and ordered your currency online (collecting it at the airport) you could get an average of €598.93.
"If time is of the essence, then there is nowhere more convenient to pick up currency than your point of departure, such as the airport," says Olann Kerrison, a currency expert at Moneycorp.
"While the price of currency at these locations is not very competitive because of the relative convenience, you can get a better rate by reserving online before you fly (sometimes only minutes before you pick up your currency). It's free to do so, and you'll usually get the online rate as opposed to the airport rate."
Pre-paid cards are a good option when it comes to locking in your holiday money at a good rate.
As the name suggests these cards are pre-loaded with cash and then used at ATMs and for purchases abroad. In most cases the card is loaded with a specific currency, normally euros or US dollars, and generally offers a decent exchange rate. If you load the card now, when the pound is strong against the euro, the amount of euros will remain on the card, no matter how much the rate changes.
There are a number of pre-paid card providers including Caxton FX, Virgin Money, FairFX, Travelex and the Post Office.
Fees and charges vary with some having an initial charge while others charge for UK and/or overseas cash withdrawals. Most are branded Mastercard or Visa, which means they can be used wherever you see these logos. Caxton FX's managing director James Hickson says pre-paid cards can help with budgeting while you're on holiday.
"One of the main benefits of using a pre-paid card, rather than carrying cash or using your debit card, is that the money on the card is not tied directly to your bank account," he explains. "This ensures you're able to plan exactly how much cash you take with you as spending money, but also means that should your card be lost or stolen, your overall bank account is protected and a replacement card can quickly be reissued to you, wherever you are in the world."
Other options for spending abroad include standard debit or credit cards, but making the wrong choice could see you wasting money on needless fees and charges.
Regular travellers might find it's worthwhile switching their current account to get a debit card that does not charge for usage abroad. But you'll only have two accounts to choose from.
The first is Metro Bank, which started trading two years ago. It doesn't charge extra for ATM withdrawals overseas or add on a foreign loading charge for purchases. However, it only has 11 branches (or "stores" as it calls them), mostly in or near London, although it has plans to expand.
The alternative is Norwich & Peterborough's Gold Classic card that offers fee-free spending and free ATM withdrawals while you're abroad. However, you'll need to pay in at least £500 a month to the account to avoid a £5 monthly account fee.
Other debit cards will charge a usage fee for cash withdrawals (2.75 per cent to 2.99 per cent) plus an ATM withdrawal charge, typically between £1.50 and £3.00.
"But the card charges that catch most people out are those levied for debit card purchases which are subject to the usage fee, plus up to an additional £1.50 transaction fee regardless of the amount," warns Andrew Hagger of Moneynet, "The worst offenders are Halifax (£1.50 per purchase transaction), NatWest (£1.25), RBS (£1.25), Santander (£1.25) and Lloyds TSB (£1)."
Many holidaymakers also like to take a credit card on holiday with them in case of emergencies. However, the golden rule is only use a credit card for holiday spending if you can afford to pay it off when the bill arrives, otherwise you'll be charged interest.
Like debit cards, most credit cards come with foreign loading fees which can bump up the cost of using them abroad. But there are a few exceptions including Halifax's Clarity card, and the Post Office's Mastercard, neither of which levies a foreign loading charge.
Using a credit card to withdraw cash anywhere, at home as well as abroad, is a big no-no. If you do you'll be charged interest from day one rather than after the standard 50 to 60 days' grace period, and the cash advance will be charged at a higher interest rate than purchases on the card. Most cards also charge a cash withdrawal fee too.
Whatever type of plastic you use overseas beware of an increasingly common custom (particularly in Europe) where the overseas retailer gives you the option to pay in pounds sterling, known as dynamic currency conversion.
It may seem a good idea that you know exactly how much you'll be debited, but the problem is that it gives the retailer the opportunity to use an uncompetitive exchange rate which could see you paying over the odds, in some cases by 3 per cent or 4 per cent, so make sure you opt to pay in the local currency instead.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 All Blacks Aaron Cruden misses New Zealand flight after drinking session, has brilliant excuse
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Alicia Keys leaks nude photo 'to create a kinder and more peaceful world'
- 5 Clothes store Joy angers mental health campaigners with Twitter exchange on bipolar disorders
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize