Whether you’re planning a summer holiday, winter escape or weekend break, getting the best deal on foreign currency when travelling abroad is a must.
But with markets in turmoil and the pound’s value flatlining it can be easy to end up paying through the nose without realising.
And once again the big four British high-street banks are under the spotlight for their unreasonable charges and misleading offers.
Last week independent watchdog Consumer Focus submitted a super-complaint to the Office of Fair Trading.
It claimed the banks offer poor exchange rates in the UK, overcharge customers using credit or debit cards abroad, and prevent effective shopping around by not being straight with their advertising.
‘Almost half of us travel abroad every year, and we face a confusing array of hidden charges every time we buy currency,’ says Mike O’Connor, chief executive at Consumer Focus.
‘Converting £500 into euros can cost from less than £10 to more than £30 depending on where you switch your money. This is a huge difference for essentially providing the same service and, typically, banks offer the worst deal.’
But in tough times, where can you get the best deals? With help from Which? magazine Streetwise has taken a look at the market in the hope of pointing you in the right direction.
Credit and debit cards
Many of us have become accustomed to the ease of using plastic and it can be hard to break the habit.
But given the banks’ growing tendency to levy high charges for using your card overseas, it’s vital to make sure you’ve got the right plastic in your pocket.
The first thing to remember is with credit cards you will almost always pay a fee to withdraw money from a hole in the wall, whether at home or abroad. So this should be avoided if at all possible.
Other charges are added on when you use cards to make transactions, but there are some competitive deals out there such as the Saga Platinum Visa and Post Office Platinum MasterCard, both of which have standard APRs and no fees when using them to pay for things abroad.
Avoiding charges with debit cards can be more difficult, and before you leave it’s always best to check with your bank or building society just how much you could get stung if you withdraw money or pay on plastic.
Some accounts, such as those offered by the Norwich & Peterborough Building Society, offer debit cards that can be used for free overseas but also have catches such as a penalty charge if you don’t deposit more than £500 a month. The days of Nationwide’s popular FlexAccount Visa debit card offering free spending in Europe are now sadly behind us.
Also, remember to notify your card provider of your travel plans before jetting off: If you don’t it might assume your card is being used fraudulently and stop any transactions you try to make.
Buying foreign currency before you leave
Despite the temptation to rely on plastic alone, it can be prudent to take a mix of cash and cards on holiday with you.
If your card is lost or stolen, the process of notifying your card provider and getting a replacement can be time-consuming, so make sure to take some cash just in case.
Here are our top travel money tips:
· Always buy foreign currency in cash if you can, as many card providers add a fee if you pay on plastic.
· Shop around and always ask at the counter how much currency you will get for your cash. Try a range of companies before making your decision.
· Don’t leave exchanging money until you arrive at the airport; they have a captive audience and so usually offer the least competitive exchange rates.
· Exchange on the internet and pick up at the airport for the very best deals, but beware if your online provider goes bust you have no protection and may not get your money back.
· Haggle over the exchange rate and some bureaux de change will tweak what they offer or agree to match the deals advertised by competitors.