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If you’re jetting off on holiday over the next few months, you need to set aside some time to organise your travel money.
Fail to think ahead, and there’s a risk of getting stung by hidden charges, poor rates of exchange – or falling into a trap which could leave you out of pocket.
This is especially important given the fall in the pound since Brexit, as this means that hotels, bars, restaurants and shops could now all cost more overseas.
The good news is, you can make your holiday money travel further with a bit of careful planning.
Don’t wait until the airport
While it can be easy to put “sorting travel money” to the bottom of your to-do list on the grounds that you can do this at the last minute at the airport, you should avoid this at all costs, as airport exchange rates can be extremely uncompetitive.
The key is to plan ahead and order in advance. Generally speaking, online rates tend to more competitive.
Try sites run by the likes of Travelex, FairFX, Moneycorp and ICE, as well as those run by Asda, Tesco, M&S and the Post Office.
Most will deliver to your door for a small fee. Alternatively, you can buy online and opt to pick up the money at the airport.
There’s a useful tool to help you find the best online rates for your holiday money at Travelmoneymax.com.
Beware of taking cash on holiday
Even though taking cash on holiday with you may seem the simplest option, you need to take care, as there is the risk of losing it or having it stolen.
There’s also the risk of running out of money in an emergency.
With this in mind, debit and credit cards can be more secure – and more convenient – but are not without their pitfalls.
Play your cards right
Many people plan on using their usual credit and debit cards while they are away, but with most pieces of plastic, you will be charged for ATM withdrawals and spending. The foreign usage charge could be as much as 2.99 per cent on purchases.
A simple way to make your travel money stretch that bit further is by being smart with your choice of card, and opting for one specifically designed for use overseas.
For those looking to take a credit card on holiday with them, top picks from financial analyst, Moneyfacts, include the Creation Financial Services Everyday Credit Card MasterCard, the Barclaycard Platinum Travel Visa and the Halifax Clarity Credit Card MasterCard. None of these charge fees when used overseas.
If you want to take a debit card with you, and you’re an existing Norwich & Peterborough Building Society Gold Account holder, the card with this account charges no fees for use abroad. However, this account is no longer open to new customers.
Other recommendations from Moneyfacts include the debit cards which come with the Nationwide FlexAccount, the M&S Current Account, HSBC’s Advance Account and Metro Bank’s Current Account.
With all these cards, there are low charges for use abroad.
Make the most of prepaid cards
Another good option for travellers is a prepaid card. These cards replaced the old-fashioned travellers’ cheques and are far easier to use.
With one of these pieces of plastic, you load you spending allowance onto the card in advance, enabling you to lock into a competitive exchange rate.
This could be particularly helpful in the current environment of exchange rate volatility.
You can then use the card to pay for goods in shops, bars and restaurants, and the best ones won’t charge for ATM cash withdrawals either.
The cards can be topped up from a linked bank account either online or by text while you’re away.
Another benefit of using one of these cards is the fact it can make it easier to keep track of your budget.
Top prepaid card recommendations from Moneyfacts include the Travelex Cash Passport, the ICE Travellers Cashcard, and the Debenhams Travel Money Prepaid MasterCard.
Do your sums
If you get stuck trying to work out the currency conversion when buying goods or withdrawing cash, don’t be afraid of using the calculator app on your phone. It is better to know exactly what you are spending before parting with any cash.
Don’t fall into the “dynamic currency conversion” trap
If a retailer gives you the option of paying in pounds rather than the local currency while you’re away, it can be tempting to say yes.
The problem is, this can be a bit of a con, as it gives the foreign retailer the chance to use an uncompetitive exchange rate – meaning you end up paying way over the odds. If you get caught out, it can add as much as 5 per cent to the cost.
In some cases, the retailer may not even ask you before processing the transaction.
When on holiday, you should always check which currency you are paying in before proceeding – and must always insist on paying in the local currency.
Take care of your cards
Finally, if you are paying a bill in a restaurant or café, always ask for the payment terminal to be brought to you. Never let you card out of your sight.