Exchange rate forecasts have been somewhat gloomy since the Brexit vote. However, although the pound may have dropped, you can still get the best possible rates on travel money if you know how. Perhaps you’re planning some winter sun for the new year. Or maybe you’re looking to gift currency to a traveller in the family for Christmas. We’ve got some great tips on how to find the best travel currency rates right now.
Make sure you know the lingo
The fastest way to get a bad deal on travel money is to get confused. Key to this is understanding what the jargon means. A ‘sell rate’ is what you will get when you hand over British pounds. A ‘buy rate’ applies to a situation where you’re exchanging currency you didn’t spend back into pounds. And the gap between the two rates is the profit margin earned by the currency trader – it can be quite large!
Buy your foreign currency online
Many of the best travel money exchange rates are to be found online. Even if you’re buying from a well-known business, such as large supermarkets, buying online is less expensive and rates tend to be more competitive. Many currency sellers offer free home delivery within a short time limit. You can also choose to click and collect – buy online and then pick up the currency from a local store.
Use a travel money price comparison site
The simplest way to see where to find the best travel currency rates is to use a price comparison site. This will give you information on commissions and delivery options, as well as whether there is a charge to buy currency back. You’ll be able to work out whether there are options online and for branch/store collection. The site will also show you whether there are any sales or special deals on particular currencies that might be useful. Just bear in mind that some price comparison sites show only a narrow section of the options on offer.
Ask for a discount
Rates are not set in stone and, particularly if you’re buying a lot of currency, it’s well worth asking for a discount. You may not get massive reductions – around 0.5% is probably fairly standard – but this can make a difference overall. It’s also worth trying to negotiate if you see a better rate elsewhere. Many currency sellers will look to match the rates of their competitors. This means there are plenty of opportunities to get a better rate if you’re shopping around.
Buy at the right time
You might think that unless you’re an exchange rate expert you’ve got no hope of getting the timing right. However, this is not the case. It’s not that difficult to monitor exchange rates – look for a rise in the pound to get the best value. You can set up alerts with a rate tracker currency website and get notified of a peak in the weeks before you need the currency. Bear in mind that there are many factors that can affect exchange rates. Budget announcements, employment figures and big political shifts can all have an impact.
If you don’t fancy taking all your currency with you, and you don’t want to use cards abroad, traveller’s cheques can be useful. American Express traveller’s cheques are accepted all over the world and are probably the best known type. If you opt for traveller’s cheques then you can replace them if they’re lost or stolen so they’re much more secure than cash. However, bear in mind that traveller’s cheques generally won’t secure you the best rate on the currency you’re buying. In fact, you’re almost guaranteed not to get the best rate with traveller’s cheques so if that’s what’s important then choose cash or cards.
Another popular alternative to carrying around your money in cash form overseas is the prepaid card. These are loaded with currency before you leave the country and then can be used as a temporary debit card. Prepaid cards are a great alternative to taking cards overseas in terms of security and budgeting. However, like traveller’s cheques, they don’t tend to provide the best exchange rates on currency. Look out for purchase costs and hidden charges too, as these can be high.
Debit and credit cards
Your own debit and credit cards are sometimes the easiest way to get the best rate on overseas purchases. However, some banks apply huge charges so you must check these out before taking this route. For example, a foreign usage fee may apply to pay with the card abroad and there may be charges for cash withdrawals. Remember you will pay whatever the bank pegs as the exchange rate at the time you make the transaction and some banks charge extra to make the conversion calculation.
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read more about Alex Hartley