Travel money: Where to get the best deal on your foreign currency?
The short answer:
To get the best deal on your travel money, avoid airport foreign exchange offices, high street banks and using your regular debit or credit card in overseas ATMs. Instead, shop around for the best travel money deals online (pick up or delivery), or take out a specialist prepaid forex card.
The long answer:
If you take regular trips overseas - or plan to when things return to normal - then obtaining a competitive rate on your travel money could save you hundreds of pounds a year.
Many people simply pop down to their high street bank or currency exchange office and get their overseas currency there. However, this can be one of the most expensive approaches, since their exchange rates are poor and they may charge commission on top.
Exchange rate matters
It's worth noting that small fluctuations in an exchange rate can make a big difference to how much spending money you receive, particularly if you're exchanging large sums. For example, you might want enough money for two weeks in Thailand (say roughly £1,000). If the pound buys 42 Thai baht on Monday, but only 40 baht by Friday, you'd have about £50 less to spend (the cost of night in a decent Bangkok hotel and a few meals).
Avoid airport currency exchange bureaus
Exchanging your money in either a UK or overseas airport is hands-down the most expensive way to get your travel money. Avoid this at all costs.
Buying travel money online before you go
One of the cheapest ways to get your foreign currency is to buy online. This is because providers have lower overheads than high street banks and currency exchanges, so can offer better rates.
Simply enter the amount you want in GBP or the foreign currency, and the website will calculate the opposite currency sum. It will then add any charges or commission, giving you a grand total. You might be able to pick up your currency in a branch of the provider (such as the Post Office), or get it delivered (usually for an extra charge). You then simply pay for your currency using your debit card.
Tip: Avoid using your credit card to buy travel money online as this could result in extra fees.
Commission fee, or commission-free
Not all currency exchange providers charge a commission on top of their rate (which they also make a profit on). If commission is charged, it will be as either a percentage or a set fee. Obviously, it's a good idea to choose a provider with a zero commission (although make sure this saving isn't wiped out by a poor exchange rate!).
Some foreign currency exchange providers will offer to buy back any left over currency you have when you return for the same rate you bought it at. Commission is usually not charged.
Finding the best rates: comparison websites
A number of comparison websites make it easy to compare the different offers from FX providers. Take some time to find the best deals, taking into account the final cost of the currency, inclusive of all fees and charges.
Using a card abroad: Is it a good idea?
You may decide not to organise your travel money before you go and instead use a card in overseas ATMs to get your currency.
This may or may not be a good idea, depending on the fees charged by your card issuer. In general, your standard UK high street debit card will be one of the most expensive ways to get your travel money. However, your bank may offer a special travel money card with lower fees.
Using your credit card may also result in very high fees.
The best option is often to order a prepaid credit card that specialises in overseas transactions. These cards tend to offer the best rates and lowest fees. The right card could be cheaper than any online Forex provider.
Take UK money with you then exchange it overseas
Another option is to withdraw pounds sterling while in the UK and take it with you abroad. You may then be able to find a local exchange provider abroad who offers very good rates. While in theory this option would bag you a great deal for your pounds, it could be a hassle to find exchange bureaus and in some countries you may encounter less scrupulous FX providers who short change you.
It's best not to leave organising your travel money until the last minute, as this could leave you at the mercy of your UK debit card provider, or worse, the airport currency exchange bureau.Get a Quote