MILLIONS of families are preparing to head off on holiday this summer.
Sorting out your spending money is a crucial step along with passports and packing – and doing it sooner rather than later can save you cash.
Holidaymakers are getting ready for trips abroad this summerCredit: Getty
The Post Office has seen a surge in demand for buying currency as people jet off for the first time since the pandemic.
The most popular currencies being snapped up are for Croatia and Caribbean Islands.
Wherever you’re heading off to, the exchange rate you get depends on the strength of the pound at the time.
If a currency is strong that means that it is worth a lot compared to other currencies and therefore has a higher value when exchanging for foreign currency.
A currency is weak if it is lower in value than other foreign currencies and gives you a poorer value when you exchange it.
An exchange rate is how much your pounds will be worth in a foreign currency.
If the value of the pound versus the euro is EUR1.5 to ?1, then for every ?100 you change up, you get EUR150 euros.
If the pound to euro exchange rate drops to EUR1.1 to ?1 then you’ll only get EUR110 for ?100 holiday spending money.
It’s impossible to predict currency markets, but it pays to keep an eye on the value of your destination as soon as you’ve booked.
You can set up a currency tracker such as the FairFX Rate Alert which will notify you when rates are on the rise, so you can take advantage.
If you’re happy with the rate available now, you could buy some of your holiday cash now and some later.
Regardless of whether you buy now or later, here are X ways to save on your holiday cash.
Buying your foreign currency ahead of when you travel means you can search around for the best rates.
Don’t buy cash at the airport on the day – these are usually among the worst rates around.
According to FairFX, exchange rates at airports can be over 20% more expensive meaning you could lose over ?200 of cash for every ?1,000 you change.
You’ll more often than not be able to get better rates at other places if you plan ahead.
Airport exchange desk rates are generally higher as they have a captive market among those changing cash last minute and don’t need to be competitive.
Use comparison sites
Compare travel money companies online, including the rates and any fees to find the best deal.
Factor in delivery costs and choose the option that gives you the most cash to spend on holiday.
If you have left it too late you might still be able to order online for collection at the airport.
Use comparison tools like MoneySavingExpert’s TravelMoneyMax, which enables you to compare pick-up and pre-order rates.
Avoid using your credit card
Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
You could also be charged a higher interest rate of this type of transaction if you don’t pay off the bill each month.
You should also avoid using your credit card abroad if possible, as you’re unlikely to get the best exchange rate unless you have one that offers the best rates for foreign travel.
Halifax’s Clarity and Barclaycard Rewards credit cards are top-rated by Money Saving Expert for overseas travel.
You might also be charged a fee for using your card abroad, either to pay or for making a withdrawal.
If you do plan on using your credit card abroad, for example for a large purchase to get extra buyer protection with section 75, then check the fess in the T&Cs first to avoid any surprises later on,
Lock in current rates
If you want the convenience of suing a card instead of cash abroad, you can lock in the current rate by topping up a prepaid card now.
Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
If you’re happy to take whatever rates are available at the time you travel then choose a debit card that offers good rates and no fees.
Best fee-free cards right now are Starling Bank or Chase’s debit card, which have no spending or ATM fees.
Avoid currency switch
Always choose to pay in the local currency rather than sterling.
When you pay by card, you may be offered the option to switch currency and pay in pounds.
But this could leave you paying for sneaky exchange fees, so always choose the local currency.
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