Here I take a look at travel money and how to get the most foreign currency for your hard-earned UK pounds.
My wife recently took a trip to New York in celebration of her 40th birthday. With me providing her spending travel money as the birthday treat, I obviously wanted to get the best deal possible.
In this instance, it is definitely worth me getting her some cash, as if she relies totally on a credit card, she has a habit of “forgetting how much she spent” and getting a little carried away.
She will have a credit card as back up and in some instances, using a credit may be the best form of payment. I’ve covered the reasons why’s and the do’s and don’t of using credit cards abroad.
- Find the Best Foreign Exchange Rates For Your Travel Money
- Additional Travel Money Foreign Exchange Saving Tips
- Additional Savings on Your Foreign Currency Exchange: Cashback
- Travel Credit Cards: A Great Option for Spending Abroad
Find the Best Foreign Exchange Rates For Your Travel Money
As with most expenditure, in this case, buying foreign currency, our first port of call for obtaining the best deal is to use a relevant comparison site.
For foreign exchange, I typically use the Money Saving Expert Travel Money Comparison site.
It’s really simple to use.
- Choose your currency
- Amount in £s you want to change or amount of the currency you want
- Travel Date range
- Choose a method of receiving the money, collect, delivery or at the airport
- Click “Search”
Easy! No need to submit personal details, or even your email address.
You will then be presented with a list in order of the best-priced options for getting you the most of the particular currency you want from your Uk pounds.
Below is an example of what £500 would currently get me in US Dollars.
All you have to do is choose the best option for you based on all the data shown. Take into account any relevant information shown in the “Details” column.
Some deals may only be open to existing customers, or there may be additional info on delivery charges or restrictions on methods of payments you can use. In some instances, it may be worth changing the amount you exchange a little in order to get free delivery.
It’s important to be aware that currency firms are not protected, so if they go bust, you will lose your money. For that reason, you may want to go with a company name you recognise. Especially if the saving difference is a matter of pennies.
Additional Travel Money Foreign Exchange Saving Tips
Order your cash in advance. This will give you the widest option of the best deals, whether you want to collect or have the foreign cash delivered.
Don’t leave getting your cash until at the airport (unless you ordered at a good rate in advance). The exchange rates in the airport will be really poor. They know they are pretty much your only option and profit at your expense accordingly.
Leaving changing your cash until at your destination isn’t a good idea either as you can’t be sure you are getting a good deal as you have nothing to compare it too.
Don’t pay for your travel cash on a credit card. The purchase of foreign currency is effectively treated as a cash withdrawal from your card and you will be charged a number of fees and interest on top.
Additional Savings on Your Foreign Currency Exchange: Cashback
As always for any online purchase, see if you can get Cashback when purchasing your foreign currency from. Ideally from one of the companies high in the travel money comparison results.
The Post Office was 8th on the list of best deals on the comparison site at $630.70 for £500. Only $2.04 less than the rates of the very best deal. Therefore with an added £3.15 cashback, the Post Office was the best option.
Double Check Details Are Correct On the Travel Money Site
When you click from the comparison site through to your chosen cheap travel money option, check all order details are the same as indicated in the comparison data.
Check the rate is the same, it might not matter too much if it’s not exactly the same but be aware of how much different it is if it has changed. Also check delivery charges, minimum order values etc
For example, in the above Post Office Online example, it said “Cost: free for orders over £400”, yet when I tried to order below £499 it was charging me £4.99 postage. So I increased my order to £507 for more currency but saved £4.99 on delivery charges.
So just be aware of differences.
Travel Credit Cards: A Great Option for Spending Abroad
Using the best travel credit cards can in many instances be the cheapest option when it comes to the cost of exchanging currency.
Firstly, you only change exactly what you need as and when you spend. Secondly, if used correctly and paid off in full, the right credit cards can be a very low, or even no fees method of exchanging currency.
Currently, the Halifax Clarity Card is the card I use as it has NO FEES when purchasing items in a foreign currency. Credit cards like this are only the better option if you intend to pay off the whole balance every month. Otherwise, you will incur significant interest charges.
If you possibly need access to more cash while you are at your foreign destination, be sure to research the best card for the cheapest cash withdrawals. Ideally, one with no fees and charges if you repay the full balance monthly.
On credit card purchases over £100, you also have the advantage of being protected by Section 75. Which is handy if purchasing from overseas, possible faulty goods you can’t easily return.
Always pay in the foreign currency on your credit card when abroad. If given the option, don’t choose to pay in UK £’s. If you paid in pounds, the overseas store or bank is doing the conversion and not your card. The fees and exchange rates will be awful and very costly.
Only use your credit card for purchases. Never withdraw cash from your credit card while abroad. It can damage your credit rating as it gives the impression you are pretty desperate for cash if you have to resort to withdrawing from a credit card.
Credit Cards Are Better Than Debit Cards For Travel Money
Let’s make one thing very clear, using a bank debit card abroad is probably one of the biggest mistakes you can make.
Debit Cards are bad because:
- They add a “Load Fee”, typically around 2.75% for converting your money into the foreign currency
- Charge an ATM fee for withdrawing cash
- Additional flat fee charges just for spending on them typically £1.50
The best advice is to use a cost-effective credit card and pay off in full. Simply don’t use a debit card abroad.
Always travel safe and ideally keep money close and secure on your person at all times when out and about.
A quick recap of key points:
Order your travel money in advance using a travel money comparison website for the best exchange rates.
Combine with cashback where possible.
Credit cards are one of the most cost-effective ways of exchanging currency on purchases if used correctly.
Don’t use a normal non-travel credit card abroad, they are way too costly.
If you have any further tips please post in the comments below, I’d love to know.