MoneyMagpie

Nov 03

How to get the cheapest foreign currency

The best way to get the cheapest foreign currency is by being savvy and planning in advance, whether you’re putting it on plastic or exchanging hard cash. Read on to discover our top tips for bagging the cheapest foreign currency possible, along with some simple ways to reduce your holiday spend.

How to budget

When you’re planning and saving to go abroad, remember that you need to factor in much more than just the flights and hotel. You need spending money for food and treats once you’re out there and probably some cash put aside for new clothes and other holiday accessories, whether it’s sunscreen or a new camera.

The most pain-free way to save is to start early – work out how much you can afford to spend in total (and be realistic!) then put a little aside each week.

If you don’t have a specific destination in mind, it’s worth considering other expenses. According to the 2011 Post Office Holiday Costs Barometer, Spain is the best-value destination in Europe (based on a basket of ten holiday items) and resort prices have dropped by at least 10% in Greece and Turkey.

If you’re looking for a city break, the Post Office says that Riga, followed by Prague and Budapest offers more bang for your buck.  Read the full City Costs Barometer for all the details.

Getting the best rate on your foreign currency

Be wary when you’re changing money, as commission free does not mean profit free.  It’s all about shopping around and seeing who is offering the best deal at the time.

Our advice when it comes to holiday spends is to avoid the high street and get online.  Currency specialist Moneycorp have discovered that us Brits overpay by a massive £300 million per year by purchasing currency on the high street rather than online. Moneycorp offers a unique currency exchange service. foreign currencyThey provide a free next-day home delivery service (for orders worth £500 or more), or you can collect your cash from one of their branches or even the airport if you’d prefer.  Completing a single €500 transaction online with Moneycorp costs up to £20 less than via a high street bureau – all from the comfort of your own home!

If you know you’re going on holiday to a certain destination and the exchange rate for the country’s currency is falling against the pound – like the Euro is now – then it’s always worth buying some currency in advance to get more money for your pound. Keep an eye on exchange rates and plan ahead.

MoneyMagpie Tip: For a great rate on your foreign currency visit Moneycorp now.

Using cards abroad

If you prefer to pay for most things on your card when you’re away, make sure you check that you aren’t being charged extra for foreign transactions.foreign currency

All credit cards will charge you both for withdrawing money and using your card.  With debit cards it depends on your bank and the type of debit card you have (Visa Debit, Maestro etc). You could be looking at around a 3% load to exchange rates, which means that spending £100 worth of Euros actually costs you £103.

Check with your bank before you go and if they do charge, think about opening an account that will provide you with a card that doesn’t. Nationwide’s Flex accounts and the Nationwide Credit Card do not charge for foreign transactions.

One of the best credit cards to use is the Halifax Clarity which is load free anywhere in the world and fee free for ATM withdrawals (although you will still be charged interest on this whether you repay in full or not, so it’s still not a good idea to rely on taking out cash this way). The Post Office credit card and Saga credit card are also load free for transactions worldwide but you will pay 2.5% and 2% respectively for cash withdrawals.

How to keep your money safe with a prepaid card

A very safe and secure way of taking money on holiday is to use a prepaid credit card.  We are increasingly keen on these as they are a very good way of keeping your bank details safe. The majority of credit card fraud happens abroad but with a prepaid card, you load it up with cash and use it as you would a debit card until it runs out.

It helps if you think of it as a PAYG mobile; once you’ve talked your way through the credit you can’t use it to make any more calls. This is not only great for budgeting, but also means that if anyone steals your wallet they can’t run up a huge bill.

The problem with prepaid cards is that fees can be quite high so it’s vital you choose the right one. One of the best cards to use abroad is the FairFX.com MasterCard which costs £9.95. With this card there are no loading fees so all you have to pay if €1.50/$2 to withdraw cash from an ATM, less than most credit or debit cards.

The next best is the Caxton FX MasterCard choose from the Global, Dollar and Europe cards. This also comes fee free but you get Caxton’s exchange rate, which is usually slightly worse than FairFX, albeit much better than you’d usually get for cash.

my Travel Cash is one of the best providers out there in terms of charges: you won’t incur ATM withdrawal fees, plus you get 1% unlimited cashback – ideal for when you’re buying gifts and souvenirs. There’s no issue fee and it’s free to top up by debit card.

See our full guide to prepaid cards here.

Cheap eating

All-inclusive holidays, which include meals and drinks, can work out to be great value for money but do remember that this isn’t always the case. Some package deals are based on typical families or couples, so you may find that what you pay is actually overpriced, particularly if you don’t drink much or any alcohol.

moneymagpie_meal-supper-foodSelf catering can be a great way to cut costs if you take the time to shop at the local markets and cook up a storm yourself but most people still want to treat themselves to a night out at a restaurant. Most MoneyMagpies already know that you can use OpenTable to book a cheap meal in the UK and even gain points to put towards a free meal but you can also use OpenTable for lots of other cities and towns such as Paris, Turin, Amsterdam and Madrid.

Otherwise, steer clear of anything too touristy – you can normally get a much better deal (and usually better food) if you go off the beaten track and hunt down a restaurant favoured by locals.

You can also check online reviews – try TripAdvisor before you travel to see which restaurants you should avoid and which you should seek out before you fly home.

Make money from your holiday

No, we don’t mean take your work with you on holiday – we know that most people simply want to sit back and relax on holiday but there are some simple, stress-free ways to make a bit of extra cash. There are lots of ways to do it – whether renting out your pad while you’re away using Gumtree, SpareRoom or a local lettings agent that specialises in short holiday lets; reviewing your holiday on social networking site Yuwie; or even selling your photos on microstock sites such as Fotolia and 123RF.

We show you all the options in our make money from your holiday article.

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