Currency rates and Travel Money options may not be the easiest or most exciting subject to get your head around. With so many places offering variable exchange rates, it can be a bit of a conundrum working out how to get the best out of your Travel Money. Not only is there the fear of paying too much for your Travel Money, but also the fear of having your holiday ruined if you should be unlucky enough to have it lost or stolen.
Your Travel Insurance can help protect both yourself and your belongings, but Travel Money can be harder to keep track of. For this reason it’s useful to know that using cash is not the only way to pay for things abroad, and it can be highly advantageous to understand the other options that are available to you.
How to pay for things abroad:
1. Currency exchange
If you wish to exchange your money and take local currency with you then it is a good idea to plan in advance. Hanging on to get your Travel Money at the airport or at the last minute could potentially leave you out of pocket. The Bureau De Change at airports can usually leave you paying significantly more for your money than planning in advance.
Exchange rates may vary even on a daily basis and different providers may offer different exchange rates, so it is wise to keep an eye out and look for the best rate when changing your money. Some providers will charge a commission which means you will pay a fee for the exchange. You may also benefit from a better exchange rate on larger amounts, so it is always worth checking this if you are a frequent traveler or travelling in a group.
2. Traveller’s cheques
Using Traveller’s cheques can be a safer option than carrying money abroad. Just like cash they can be used in shops, hotels and restaurants as payment and change will be given. However unlike cash as long as you sign and note down the serial numbers of your Traveller’s cheques then you will be able to get them replaced if they are lost or stolen, making them a desirable option if you are careless or worried about travelling with large amounts of cash.
3. Prepaid cards
Pre-paid cards can be a great alternative to cash. They often offer competitive exchange rates whilst not incurring any of the additional costs associated with using debit and credit cards overseas. Much like a phone top up card or retailer gift card, prepaid cards can be a convenient way to manage your spending.
While cash is easily visible to the eye of pickpockets and thieves, prepaid cards may be slightly more inconspicuous and therefore a safer option. They are also a great way to manage your spending as you can plan your cash limits in advance and avoiding ending up with pockets full of shrapnel towards the end of your trip.
4. Credit or Debit card Transactions
Many of us use credit cards to book our holidays or even everyday spending. A credit card allows you to make advanced purchases and pay interest on the money you spend in affordable increments. Debit cards take the money direct from your account, so you are required to have the funds to cover your purchase at the time of the transaction.
Using your credit or debit card abroad means that you can limit the amount of cash you take, but you are likely to be charged a fee for using the card. It is therefore advisable to check what costs you could incur with your bank before you travel. You will also be charged at the current exchange rate for your purchase, so you may not always get the best deal, and the purchase amount will be displayed in the local currency unless you have the option to pay in sterling.
5. Cash withdrawal
When you are abroad it’s possible to withdraw cash from an ATM using a credit or debit card. The majority of banks and building societies will charge a transaction fee for any withdrawals and this is likely to be a percentage of the transaction. When you make a withdrawal this charge will generally be increased or can be a set amount, so it can be quite expensive especially if making multiple withdrawals. Therefore, again make sure you understand the charges inflicted by your bank before you make any withdrawals.
6. Dynamic currency conversion
Dynamic currency conversion is a unique process that allows certain retailers to convert your bill into your home currency (such as sterling) if you are using a credit/debit card overseas. In many cases, due to the specialist nature of the service, the retailer may apply a higher exchange rate for carrying this out. However, it may be worth it to see the exact price of what you are paying for in a currency you are used to dealing with. You should be able to request to check each slip or bill before entering your PIN to see exactly what you are paying.