How to avoid wasting holiday money before you leave home

Foreign trips are expensive - so don't waste money on a dud currency deal, warns David Prosser

Just one week to go for millions of families looking forward to a break over the spring bank holiday. But if you're travelling abroad this half-term, or planning ahead for the summer holidays, think carefully about your spending money. Paying too much for foreign currency is a serious waste of money.

In theory, the absolute cheapest way to spend money overseas is on plastic. The exchange rate you get is based on the wholesale rate levied by Visa or Mastercard, which is pretty close to the rates charged in the international money markets.

However, most debit and credit card providers add their own charges when you use their cards overseas. These are likely to include a loading fee - a percentage charge skewing the exchange rate in favour of your card provider - fees for withdrawing cash from ATMs and possibly transaction fees when you use plastic in shops and restaurants while overseas.

Just one company does not levy any of these charges. Nationwide Building Society's debit card is free to use overseas, while its credit card has no loading or transaction fees, but does charge £1.50 on overseas cash machine withdrawals, the same as in the UK. These cards are therefore the cheapest way to spend money while you're in a foreign country.

If you prefer to take cash - or you don't have access to Nationwide's products - it's not so easy to find the best deal.

"Not only do you have to consider the commission charges, but you must also take into account exchange rates, which change on a daily basis," warns Lisa Taylor, of financial analyst Moneyfacts. "Even if you take the time to search the market, calculating the total costs, the chances are that the same deal could not be found the next day."

Comparing costs is not straightforward. Commission rates vary hugely, but can also be misleading. A company that charges a high commission may actually be better value than a rival with no commission at all but a better exchange rate.

Broadly speaking, most analysts advise avoiding high-street banks and tour operators when you're changing money. While it's convenient to buy your currency from the local branch of your bank, or from the company selling you a holiday, you're likely to get less foreign currency for your pounds.

Specialist exchange services are a better bet, as long as you tread carefully. These include the bureaux de change that operate both on the high street and in airports, as well as companies such as Marks & Spencer, now one of the country's biggest foreign exchange providers.

The latter is often particularly competitive. A Moneyfacts snapshot survey of foreign exchange providers, conducted earlier this week, found M&S offered one of the best deals on both euros and dollars. Martin Lewis, who runs the website, says this is not unusual.

"Marks & Spencer and the Post Office are good places to start - they often tend to sell you the most currency for your pounds," he says. "But there is no guarantee that they will do on the particular day you need to buy it."

If you are shopping around, there are several traps to avoid. "There are big differences in advertised prices, depending on where you buy, with rates varying greatly from a branch, by phone, online or at the airport," says M&S's Liz Neild. Travelex, she points out, is often one of the most competitive foreign exchange companies, but its best rates are only available online.

"Travel money bureaux price regionally and the more out of town you are the worse rate you are likely to get," Neild adds. "Also, bureaux often do not set their rates until midday so they can compare what their competitors are offering, so try and buy your currency in the afternoon."

Finally, remember that while a lot of companies now offer delivery services if you're buying online or by phone, there may be a cost. Weigh up the convenience of delivery against the saving you may be able to make elsewhere.

A modern version of travellers' cheques?

* Travelex this month launched the latest "pre-pay" card aimed at people travelling abroad. The concept is simple: you load up the card with foreign currency before you leave. The card can then be used for cash withdrawals in ATMs and to pay in shops and restaurants abroad. Around six providers now offer similar cards, including American Express and Western Union.

* However, many cards charge you to load up the plastic before you leave the UK and then each time you withdraw money or pay for a transaction - £2.50 for each withdrawal at Travelex, for example. Transaction fees are also common. Travelex doesn't charge this way, but you'll pay 4 per cent at Western Union when you use its card to pay for goods and services.

* Pre-pay card providers argue that the advantage of their plastic is that it as secure as travellers' cheques and much simpler. The cards are generally chip and PIN equipped, so there's not much point in stealing them. And if you do lose the plastic, providers can get a new one to you quickly. However, the cost of these cards is likely to outweigh the convenience for many travellers.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Suggested Topics
Arts and Entertainment
tvGame of Thrones season 5 ep 4, review - WARNING: contains major spoiliers!
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
Finacial products from our partners
Property search
  • Get to the point
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

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living