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
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

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
    UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

    39.8 degrees recorded on Tube

    There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
    Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

    Computerised cooking is coming

    From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
    Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

    Jessie Cave's feminist cartoons

    The Harry Potter star tells Alice Jones how a one-night stand changed her life
    Football Beyond Borders: Even the most distruptive pupils score at homework club

    Education: Football Beyond Borders

    Add football to an after-school homework club, and even the naughtiest boys can score
    10 best barbecue books

    Fire up the barbie: 10 best barbecue books

    We've got Bibles to get you grilling and smoking like a true south American pro
    Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

    Nick Bollettieri's Wimbledon Files

    Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
    Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

    ‘This is one of the best McLaren teams ever – we are going to do it’

    Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most