If you’re planning a holiday abroad, getting the best rate on your travel money should be near the top of your to-do list.
After all, the cost of exchanging your money, and fees for spending abroad can quickly rack up if you wait until the airport to buy your currency, or if you use a card with excessive charges for overseas use, and most of us are looking at ways to cut the cost of trips as the cost of living soars. You can find out more about keeping holiday costs down in our guide 13 ways to reduce holiday costs.
If you want to get the best exchange rates, you should either use a fee-free debit or credit card, take a prepaid card, or order any travel money you plan to take online in advance, or arrange a combination of these before you leave home.
Here’s our guide to finding the best exchange rates for spending overseas.
Where to buy foreign currency before you go
If you plan to take a few hundred pounds worth of euros with you in cash, for example, you’ll want to get the best rate before you go.
You can compare exchange rates online using MoneySavingExpert’s TravelMoneyMax tool or the website Compareholidaymoney.com. You’ll receive a list of the best deals to choose from, with options for collecting the cash including home delivery, picking it up at a bureau or at the airport. At present, supermarkets such as Asda and Tesco are often found in the best buy tables for exchange rates.
Bear in mind that exchange rates are constantly changing, and sometimes you might find you get a better rate if you exchange a larger amount of money than a small sum which might incur some fees.
For example, at the time of writing, The Currency Club ranked top of the table on TravelMoneyMax for changing £250 into euros and getting the cash delivered, giving €285 after charges (the delivery fee is £1.80 for amounts under £700 from this provider). If you’re able to collect your money from a local exchange bureau ,you can usually receive slightly more for your money.
If you can avoid doing so, never leave buying foreign currency until you reach the airport, as you’ll usually receive a poor deal. However, you may choose to compare rates and buy your currency online before you go and pick up your money when you arrive at the airport if this option is available.
The best cards to use abroad
According to financial data provider Moneyfacts, taking out £250 from an cash machine abroad with a debit card will run up hefty charges of £11.88, on average, while using a credit card to take out the same amount could incur up to £14.95 in charges, before any interest is applied.This makes it really important to take a card that doesn’t charge steep fees for spending abroad.
Typically, using a card for your overseas spending could mean that you’re paying non-sterling transaction fees of about 3% on purchases, a fee of up to £1.50 each time you use a debit card, and cash withdrawal fees.
If you’ve got a few weeks to go until your holiday, and you haven’t got a card that doesn’t charge fees for using it abroad, it’s worth starting the application process now, as it can take a couple of weeks for your new card to arrive.
It’s always useful to have a credit card in your wallet that you can use abroad without incurring extra fees. Ideally, you want one that enables fee-free cash withdrawals too. If you don’t use one of the fee-free cards, you’ll pay a fee of up to 3% on any spending abroad.
For example, Barclaycard Rewards credit card is fee-free for spending and withdrawals abroad. Plus, you’ll benefit from 0.25% cashback on most spending at home and abroad, along with other benefits such as five free months of Apple Music and Apple TV+.
Halifax’s Clarity credit card has been a top pick for holiday spending for many years, also charging no transaction fees on purchases abroad or cash withdrawal.
Bear in mind that you benefit from the added consumer protection of Section 75 for purchases over £100 if you pay by credit card. This means you should be able to get your money back from the provider if something goes wrong, such as if a scheduled day trip is cancelled while you’re abroad and you don’t get your money back from the trip organiser.
This protection applies to purchases abroad from overseas retailers (on purchases between £100 and £30,000) if, say, the goods are damaged or the supplier goes bust.
However, remember that with credit cards, interest charges apply as soon as you use them to withdraw cash. Also, some ATM providers overseas charge fees for withdrawals, so generally it’s wise to make a single large withdrawal if you need to and have somewhere safe to lock your cash, rather than lots of smaller withdrawals.
Find out more about how credit cards work in our guide A simple guide to credit cards.
You can also find debit cards which don’t charge a transaction fee for spending or withdrawing cash when you’re abroad. But, unlike a credit card, you may need to open a bank account to get one of these cards.
For example, Chase, the digital bank, offers a current account with a debit card that charges no fees for spending or withdrawing cash abroad. You also receive 1% cashback for 12 months on some purchases.
App-only Starling Bank’s debit cards also offer fee-free spending and cash withdrawals when you’re abroad. Signing up for its current account may appeal, too, since it’s been voted the best on the market at the British Banking Awards. It comes with plenty of useful features, such as tools to help with budgeting and saving.
You can spend with an app-only Monzo bank card abroad without additional fees too. Withdrawals are fee-free in the European Economic Area (EEA). Elsewhere, you can also withdraw up to £200 fee-free every 30 days (charges are 3% after that). You get lots of other features with this bank account, including savings pots, and spending budgets, to boot.
Prepaid travel cards
If you’re sticking to a strict budget while you’re away, prepaid travel cards can be useful. You can load them with currency from your bank account before you leave, and use them like a bank card while you’re abroad, making it easy to keep track of spending. Find out more in our guide Prepaid cards explained.
You benefit from the best exchange rate at the time when you move money onto a prepaid card, as it’s based on the market rate (‘interbank rate’). This is the rate banks offer each other when exchanging currencies, which you can’t get on the high street. This means that you don’t need to fear currency swings eating into the value of your money while you’re away if you’re using a prepaid card, as you’ve already secured your exchange rate in advance.
For example, you can top up the Caxton FX Currency Mastercard through direct debit or online before you go, or while you’re away. There are no fees on spending or withdrawals abroad, or limits on how much you can withdraw. However, you must have a minimum of £100 loaded onto the card.
Revolut is another example of this type of card, but it’s more than a prepaid card and comes with several extra features, such as spending analytics, cashback and rewards with certain retailers.
You can load most major currencies onto this card in advance of any trip abroad to lock into the exchange rate. If you want, you can hold balances across a range of currencies on a single card, which can be useful if you travel abroad frequently.
You avoid exchange rate fees by loading and spending on the card on weekdays (but you’ll pay a mark-up between 0.5% and 2.5% at weekends to move between currencies, when the markets are closed). You’ll need to sign up for a physical card (the card delivery fee is £4.99), and use this to withdraw cash, if needed. If you need cash, you can make up to five free withdrawals or withdraw up to £200 a month (there’s a 2% fee above this).
Tips for spending abroad
- When you come to pay for something overseas, you may be asked if you want to pay in the local currency, or pounds. If you opt for pounds, the retailer can apply a so-called ‘dynamic currency conversion’, and rates generally aren’t competitive. This means that you should alway opt to pay in the local currency to avoid poor exchange rates.
- These days, very few holidaymakers rely on travellers’ cheques, as there are plenty of other easier ways to spend fee-free abroad. However, if you remain a fan, bear in mindthat there will be a fee for buying cheques and changing them into the local currency, and fewer places accept them these days.
- Ideally, take a few different spending options, with some cash alongside, for example, a prepaid card and fee-free credit card, so you have a choice when it comes to how to pay. You could also take an app-only debit card too, if you’re worried about losing your cards.
- Search for the best currency conversion rates to take cash abroad. Online currency exchanges such as Travel FX and Fourex (and supermarket banks, as mentioned above) often have good rates, provided you plan ahead to allow for delivery.
- If you’re on a budget, a prepaid card is a good option as they give you complete control over how much you transfer onto the card and spend while away. You can load more currency onto the card, but at least you’ll know when you’ve reached your ideal limit.
- Beware that some prepaid cards aren’t accepted for things like car hire, or at petrol stations, so you’ll need another option such as a credit card.
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