I've been swamped with holiday money questions on Twitter, Facebook and while out filming roadshows for my new TV series. From Andy's "Will the rate improve in Aug or shall I get euros now?" to Alice's "Booked honeymoon in euros, already lost £200 - should I wait to pay rest?" and many more.
I need to start with a confession. I don't know what'll happen to currency rates. Nor does anyone else and if they tell you they do, they're lying (some will always guess right, but that doesn't mean they know). Instead I want to give you strategies to beat volatility and get the best price.
It's worth a bit of context though. Before the EU vote a pound bought €1.30ish - it's now a little under €1.18. At this rate your holiday will be far more expensive than last summer when it was €1.43, a bit more expensive than the summer before but a touch cheaper than the year before that when it was €1.15 - so this ISN'T a historical anomaly.
Much of the pound's resilience is because Brexit has weakened the euro too. The pound has faced a much bigger drop against the dollar, where it's at a 30-year+ low, hanging around the £1 buys $1.30 mark by 6pm Tue.
For more on what Brexit means for mortgages, house prices, EHIC cards, savings and more, see my full Brexit Q&A. Here, let's stick to currency.
1. Easy way to get near-perfect rates everywhere, every time, with extra protection. I'm going to start where I usually do with specialist overseas credit cards. All regular travellers should pocket one. Yet the near-perfect rates here are based on the rate on the day you spend. Later I've options on how to smooth out currency moves...
Most debit and credit card firms get a near-perfect exchange rate from Mastercard or Visa, but then add a 3%-ish 'non-sterling exchange fee' to what they charge us, so £100 of euros costs you £103.
Specialist credit cards have no exchange fee, so we get the same near-perfect rate banks do, without that add-on. So simply pocket one, only for use abroad, ensuring you repay IN FULL each month to minimise interest and use it on every holiday. My top picks are...
- Long-term winner: Halifax Clarity (eligibility calc / apply*) has good feedback and a) It's a Mastercard, which usually wins on the underlying exchange rate - see rates compared. b) It has low fees for cash withdrawals.
- Slightly cheaper at ATMs: The Creation Everyday (apply*) is similar, but cash withdrawals are a touch cheaper. We've little feedback though (let us know).
- Easy-to-get card, but bad for ATMs: The Aqua card (eligibility calc / apply*) has no exchange fee, pays 0.5% cashback on spending and accepts some with past CCJs/defaults. But ATM withdrawals have high fees & high interest.
These aren't the only specialist cards - see full list. If you already have one, it isn't worth shifting. Check the two overseas debit cards too.
The Golden Rules. Full info: Top Overseas Cards (APR Examples).
1) Pay on the card - it's cheaper than withdrawing cash to spend.
2) Clear IN FULL or these cards are 18.9%, 12.9% & 34.9% rep APR.
3) You usually pay interest on ATM withdrawals (not spending) even if you clear in full. Even so, Halifax and Creation still beat most bureaux.
Extra protection: With credit cards (not debit, prepay or cash), you get Section 75 protection on all spending over £100, incl abroad, so if there are problems with what you bought, the card firm must sort it.
2. Find best rates from 40 bureaux with TravelMoneyMax site & apps. Our Travel Money comparison site compares 40 bureaux to find you the cheapest travel cash. Tell it how many euros, dollars, ringgits, etc and it finds cheapest, incl fees.
We now also have the TMM iPhone app or TMM Android app, which do the comparison too. They've the added function of a personalised currency calculator - it stores what plastic you have and what you paid for your holiday cash. Then when you buy something it shows YOUR cheapest way.
PS. Don't leave it until the airport. Airport and ferry-port rates are usually atrocious, as they know you're a captive customer. At the very least, pre-order ahead online for airport pick-up to get a better rate.
3. A trick to buy now with protection against currency swings. While not the very best rates on the market, a couple of bureaux's T&Cs can be manipulated to give you protection against currency swings as you order at today's rate for collection before your holiday. Then...
- If the rate gets worse, you're up as you got it at today's rate.
- If the rate gets better, you cancel it and buy at the new rate.
This was a corking trick when we launched it a few weeks ago, as you could buy up to 60 days ahead and cancel at no cost. Now most firms have altered these terms. Of the big bureaux left (and you'd want big brands as they're holding your cash with little protection) there's...
- Travelex* & Tesco: Order for collection up to a week ahead, and cancel for free before last 24hrs. Good in case of imminent fluctuations.
- Sainsbury's*: Order for collection up to 30 days ahead, but it's £10 to cancel. Can be good for large buys (£500ish+); see the £10 as 'insurance'.
I'm not saying this is a must do, but it's an option if you're worried about moves. Use TravelMoneyMax to see which of these bureaux (they're all in there) give the best rate.
4. How to hedge your bets. A simple way to guard against currency moves is buy some now, and some just before you go. This diminishes the impact of rate moves (good ones as well as bad). To get the best rates now, use TravelMoneyMax. To get the best rate when you go, use a specialist overseas card (see point 1).
5. Save over £100 per €1,000 spend. Whatever the rate of the currency you're using, don't throw more money away by paying the wrong way. I wanted to show you the scale of the differences, here's a comparison on Monday's rate.
The cost of €1,000 (5 x €100 at ATMs, rest spent in 20 transactions)
- Top specialist credit card repaid in full: £842
- Cash, via TMM's cheapest bureau (must pick up in London): £844
- Cash from M&S on the high st (non-cardholders): £862
- Using a debit card from hell (Halifax in this case): £896 (see point 9)
- Change at airport (not pre-ordered): £959
6. Can't get/don't want a credit card? Try Supercard. The Travelex Supercard* is a hybrid card ANYONE can get, as there's no credit check (they do ID-checks). Full info in Supercard analysis, in brief...
1) Via its app, link it to your existing debit or credit cards (not Amex).
2) Spend on it abroad.
3) It charges your plastic in pounds, at that day's Mastercard exchange rate with no added fee, making it far cheaper than spending direct on most cards.
Some of you will have had a Supercard as part of a limited trial last year. If you still want it, you need to reapply. The big difference is it now has a 2.99% fee for cash withdrawals, so while the exchange rate's the same as the top specialist credit cards, it's costlier for cash.
Plus you don't get the added Section 75 protection with Supercard, even if you link it to a credit card. However, if you link it to a card that pays you cashback or rewards, you will get those.
7. Free £10 when you load £50+ on top PREPAID cards (anyone can get one). With prepaid cards, you load cash, use 'em like a debit card - and there's no credit check. The rates can be very good, but unlike the options above, here you get the rate on the day you load - great if the rate drops, bad if it improves.
- Top pick for dollars, euros & some others: Sign up via this WeSwap* link to get an extra £10 when loading £50+ (there are approx 2,000 of these bonuses left). It'll give you the perfect interbank exchange rate for a year, provided you wait a week for the conversion to happen (normally there's a 1% fee for this). There's no ATM fee if you withdraw over equiv of £200ish but there is for less. Full analysis: WeSwap.
- Top pick for other currencies: The Revolut card* gives the perfect interbank rate for more currencies, with no fees on spending or ATM withdrawals (up to £500/mth, 2% above that). Sign up and use the code MSE for an extra £5 when loading £500+. Full analysis: Revolut.
For more help and to see how prepaid cards stack up against the top credit cards, see Cheap Prepaid Cards.
8. Should I pay in pounds or euros? And other key questions...
Q. When they ask 'do you want to pay in pounds or euros', what do I say? In a nutshell, pay in euros, for why see my pay in euros? blog. And as for just how costly it would be if you get in wrong, MSE Guy found out first-hand last week (he got it right) - see his Paying in pounds rip-off blog.
Q. Will withdrawing cash abroad hurt my credit file? On the right card it's cheap, but there is a possible impact - see withdrawing abroad.
Q. Why've I been charged extra at a bureau? Pay on a credit card & it counts as a cash withdrawal - full help in Paying at bureaux.
9. Is your bank card an overseas DEBIT CARD FROM HELL? Not only do they add around 3% to the exchange rate and an ATM fee, they also charge up to £1.50 every time you use it to spend overseas.
DO YOU HAVE A DEBIT CARD FROM HELL?
Bank of Scotland | Halifax | Lloyds | Santander
TSB | NatWest/RBS (hell for small spends) | Clydesdale/Yorkshire
ANY other card, including a credit card (if repaid IN FULL), is cheaper to spend on than these. See full Beware the debit cards from hell info.
And to find what all your plastic charges, use the TMM iPhone app, TMM Android app or our How good is your current plastic? checker.
10. Take a peek inside my overseas travel wallet. Are you part of the 'overseas wallet or purse' club? I am. After all, there are some things you only need when abroad. The first is a specialist credit card - these tend to be pretty poor for UK use, so mine lives in the wallet till I go away. To find out what else is in there, take a peek inside it.
This article first appeared in the weekly email on 6 July 2016. Its contents were fact-checked and updated on 12 July 2016.