As the schools break up, it signals the start of the annual holiday season with many of us heading abroad in search of sun! With the pound at a low level against foreign currencies such as the Euro, we will need to be careful to ensure our money goes as far as possible. Here’s some top tips on how to make the most of your holiday money.
If you are taking cash – buy it before you get to the airport. Exchange rates in airport money shops are notoriously bad and you will pay far more for your foreign currency there than on the High Street (real or virtual!)
When abroad, use your cards carefully. If you can, find out what charges you will incur before you go. For example, some debit cards have a fixed fee for purchases abroad. You could be buying a couple of drinks for €5 and be landed a fixed fee of £1.50 on top.
Your credit card may be a better way to pay, as they tend to have a percentage fee rather than a fixed one. Be careful, though – if you don’t pay the credit card off in full, you’ll still incur interest charges on the outstanding debt. And if you take money out of a cash machine using your credit card, it’s likely that you’ll be charged interest from the time you take that cash out.
If you’re paying for items costing over £100 and under £30,000, by using your credit card you’ll have some protection under the Consumer Credit Act – which might be useful if you’re renting a car abroad this summer.
You will sometimes get a choice between paying for card purchases in pounds sterling or the local currency. MoneySavingExpert Martin Lewis advice is to “always say the local currency”. This is because if you pay in euros, say, the UK bank does the conversion. Pay in pounds and the foreign bank does the calculation and that may well cost you several percentage points.
There are a number of new options available for spending money abroad. Worth exploring are Monzo and Revolut – but always check the small print to make sure you know exactly what they will be charging you for.