If you're travelling abroad this Easter, it's well worth taking the time to think about how you're going to manage your money before you go. Exchanging cash at the local bureau de change in France or the US is one of the easiest ways to make your trip more expensive. High commissions or poor exchange rates can cost you hundreds of pounds during a trip, while if you're planning on relying on your plastic while you're away, you could end up getting hit with dozens of hefty charges if you're not careful.
Credit and debit cards
Credit cards are usually the cheapest way to manage your money when you're abroad – but you'll need to check the terms and conditions of your individual card to be sure. Almost all credit cards charge a "load fee" every time you use your card abroad. This is typically about 3 per cent – and is factored into the exchange rate at which your transactions are converted. Even after this charge has been applied, however, you're likely to get a better rate on your card than you will at an exchange booth.
There are currently two credit cards on the market which don't charge any load fee – offered by the Post Office and Nationwide. However, Nationwide is introducing a 1 per cent fee this summer – which is much cheaper than the typical 3 per cent, but still more expensive than the Post Office. If you do use a credit card abroad, make sure you pay off the balance in full once you get your statement. That way you'll avoid being charged any interest.
Using your debit card abroad tends to work out more expensive than using a credit card – and if you're on the Maestro network, you may find that it's not accepted in as many places. Many banks charge a fee per transaction when using your debit card abroad, as well as a load fee – so charges can mount up very quickly. Again, Nationwide is the exception, currently charging no load or transaction fees. From 1 June, there will be a load fee for transactions outside Europe – but all European transactions will remain load free.
If you need to get your hands on some cash, it's important to not use your credit card to withdraw money from an ATM. As well as getting hit with a hefty fee, you'll get charged a much higher rate of interest which will start being applied from the moment you make the withdrawal – even if you pay your balance off in full at the end of the month.
If you use a debit card to withdraw cash, you'll still get hit with a fee, but you won't have to pay interest – so it's best to make a few large withdrawals on your holiday, if you want to minimise the fees.
If you want to get some foreign currency before you go, Travelex remains the best place to go – as it has a best price guarantee. Nevertheless, its exchange rates still tend to be more than 3.5 or 4 per cent off the market price – so work out more expensive than spending on your credit card.
You can order cash from Travelex online at www.travelex.co.uk, and can have your currency delivered to your home – or you can arrange to pick it up at one of their branches, at an airport or station, before you travel.
Travelex's guarantee only applies up to amounts of £2,500. If you're looking to exchange a larger amount of money, specialist currency brokers, such as hifx.co.uk or currenciesdirect.com, may be able to offer you a better rate.
All the best rates are found online. Don't wait until you get to the airport to change your money – you'll get much worse rates.
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