When it comes to saving money when travelling abroad the best advice you can take is to be prepared by planning and doing your research well in advance. Despite this, more than a third of Brits won’t think about purchasing foreign currency until a week or less before they travel, which can leave them with a very limited chance to shop around to get the best deal.
In fact, it was reported in 2014 that 1.63million travellers buy their currency at the airport every year. Although the British Pound is expected to strengthen against the dollar until spring next year, only shrewd buyers will reap the real gains as those who exchange currency at airports lose an average of 5% of the transaction value.
Here are our top five tips that will help you save money when travelling:
1. Get your foreign currency before you travel
According to the Post Office, travellers buying foreign currencies in airports at the last minute waste £21 million every year. To save some money before you fly, Deb Carr of Travel Mid North Coast NSW advises to “Plan ahead, watch the exchange rates a few months before and exchange at your bank not at the airport as you may get a better exchange rate and less fees.”
Make sure you exchange your money at least a few weeks in advance and do your research to find the best vendor.
As well as comparing charges from the Post Office and your local bank branches (which may get you a better rate if you’re an account holder), you could order your currency online in advance and pick it up from the airport on the day you fly. Again, this will be cheaper than buying it from directly from the airport kiosk.
However, if you fail to do this, Emma Casburn, Managing Director at Infinite Travel, advises travelers to withdraw their money in the local currency when abroad. She says: “If you withdraw cash in the local currency from ATMS abroad, rather than Sterling, you’ll avoid being hit twice by the exchange rate and other charges. I’d also recommend using a card, such as We Swap; in my opinion, the rates look very good, and you can use it as a Debit Card abroad without fees.”
Whether it’s a short ski break or long-haul holiday, you’ll always need cash for the immediacy when arriving; be it transport, refreshments or entry fees.
2. Research credit and debit card rates
Always research credit and debit card rates before you travel; this is because they could end up being your cheapest or most expensive option when withdrawing cash or making purchases abroad! In fact, you could end up spending £68 or more than you originally planned if you use certain credit or debit cards. (source)
However, Visa and Mastercard are both good options to consider because they have a standard charge of 0% within Europe, and 1% worldwide (this charge is also referred to an exchange “load”). Put simply, the higher the load, the worse the exchange rate, and the less foreign currency you get for your British Pounds.
A full list of overseas charges can be found at Money Saving Expert.
Carson Yarbrough, Savings Expert at Credit Cards Explained, says: “Use a credit card with no foreign transaction fee to save you a ton of money. Of all the fees that credit cards can charge, there is no fee that’s more unnecessary than a foreign transaction fee, which are imposed by many credit cards on any transaction that’s processed outside of the United States. Credit card users are becoming increasingly aware of these fees, which are typically 3% of the amount charged, and are not interested in traveling with any card that imposes these unnecessary surcharges. In response, the credit card industry has been dropping foreign transaction fees on many of their cards, especially those marketed to international travellers.”
Remember, if you do choose to use your credit or debit card abroad, you should inform your bank. Sarah Schlichter, Senior Editor of SmarterTravel.com, says: “One thing many people forget to do is notify their credit card companies that they’ll be traveling. Calling the company to put a travel alert on your account will usually keep it from being frozen when you start using the card in a foreign part of the world.”
If you’re going to use your credit debit card abroad, Krystal Rogers-Nelson from A Secure Life, also advises: “Make multiple copies of the front and back of your credit and debit cards before leaving home, or writing down your account and customer service numbers in case your credit card gets lost or stolen. Keep this information in a safe location separate from your credit cards.”
3. Shop around to find the best FX rates
To save money when travelling abroad, you should shop around to find the best rates from various FX (Foreign Exchange) providers. There are plenty of providers to choose from, including the Post Office, banks, and more specialist FX companies.
Gloria Atanmo, a Social Media Influencer, Digital Storyteller and Travel Blogger at theblogabroad.com, provides the following advice: “It’s sad how many tourists fall into the trap of exchanging their money at airports, where they basically rob you with a smile on their face, or on the streets, where locals will often give you fake or counterfeit money.
“One of the biggest, most common mistakes people make is losing out on so much money while getting it converted. I have a couple of currency exchange apps that give me real-time updates for the USD equivalent. Especially during crucial political decisions and elections, currency exchange rates rise and fall quite often, so I like staying updated on what 1 USD should yield in foreign countries.”
If you find yourself confused with all the rates, commissions, and extra charges you might incur, don’t panic; just ask the provider how much foreign currency you will get for your money after these charges have been deducted. You can then choose the one that gives you the best rate.
Left your planning to the last minute? WhichFX compares the cost of brokers and will present you with the best deal so you don’t have to!
4. Don’t purchase your currency when abroad
Don’t wait until you reach your destination to purchase foreign currency You generally won’t get a better deal by choosing to change your cash overseas than if you were to do so in your home country.
Though there may be some local bureaus overseas that might offer better rates, it is a risky gamble as you won’t know for sure until you reach your destination. Our advice when it comes to saving money is it’s better to be safe than sorry. Erin Conrad from Telco Solutions proffers using the cloud and messaging apps such as SMS/WhatsApp/Email to download money, safely & securely while on the move.
Cherie Bombell advises “When we are travelling we use a QANTAS card. Ron, my husband, loads it up when the Aussie dollar has a good rate against the currency where we’re traveling to. It’s also possible to go on-line and switch currencies. Ensure that is looked into before going away so that can easily access if/when you need to.”
Another risk with changing your money while you’re abroad is that you need to take extra precautions to keep this cash safe. Janice Waugh from Solo Traveler advises in ‘Protect Yourself from Pickpockets: Keep Cards & Cash Safe’: “One of the things that travellers worry about most is pickpockets. Make sure that you carry your money in multiple safe places on your person [and] beware of crowded places. Markets, train stations, large public events… these are the types of places that pickpockets love. Your purse should have a flap and a zipper. If you carry a daypack, wear it on your front rather than your back in these places. If you insist on carrying a wallet in your pocket, it should be a front pocket not in the back.”
5. Pay in cash to avoid Dynamic Currency Exchange
Dynamic Currency Exchange (or Dynamic Currency Conversion) is what occurs when you use a credit or debit card to make a payment or withdraw cash abroad. If you choose to pay in your own currency, the foreign bank will do the convert the currency for you. This can result in high hidden charges.
Although paying in the local currency will be cheaper than converting it to that of your home country, you’ll still incur a fee for using your credit or debit card abroad. To avoid this, buy your foreign currency before you travel so you can pay in cash wherever possible.