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Travel Money – What’s Best For Your Holiday?

August 4, 2014

As the warmer weather approaches and the TV adverts become dominated by shots of holidaymakers in exotic locations, it’s easy to find yourself thinking about where in the world you’d like to go on holiday. But with all the many ways that you can pay your way these days, it’s worth considering how you’ll manage your money abroad.

Euro and US Dollar Travel Money Cards

Prepaid travel cards work similar to credit and debit cards and usually feature the MasterCard or Visa logo.

There are plenty to choose from and depending on the issuer, you can load them online, instore, or over the phone in advance of your travels. Some can even be topped up whilst you’re away. They’re most commonly available in Euros or US Dollars and can be used wherever you see the card’s payment network Acceptance Mark logo on the establishment’s door or window, or on ATMs. Just like a debit card, they’re easy to use and you’ll usually be asked to key in your card’s PIN when using it for security.

The main advantages that these cards offer is that they can usually be used in the country of the currency shown on the card without any purchase or ATM withdrawal fees. They also often offer a great exchange rate – giving you more money for your pound. This also makes them ideal for snapping up those online shopping bargains in the USA or the Eurozone.

Multi-Currency Cards

These cards are very similar to Euro and Dollar cards, but in this case, you just load GBP onto them before you travel and then use them pretty much anywhere in the world. There are plenty to choose from and you’ll benefit from good exchange rates wherever you go. And of course, you’ll avoid having to risk carrying large amounts of cash around with you.

Again, there are usually no purchase or ATM fees abroad, but depending on the provider, you may be charged a fee if you use the card back in the UK.

Using A GBP Card

You could of course just use your everyday debit card issued by your bank or building society. But just as with a credit card, you’ll no doubt attract plenty of fees every time you use your card abroad.

You might risk exposing your main bank account details whilst you’re away, so you could come home to a plundered account that’s also full of bouncing Direct Debits to sort out. A better alternative could be to take a prepaid card with you instead.

Although there could be fees for withdrawing cash and making purchases abroad, you’d protect your main account. And at the end of your travels, you could use the card to help you budget back in the UK, or just spend what’s left on it and then keep it safe for your next break.

Ordering Foreign Currency Before You Go

It’s often a great idea to get at least some of the currency of the country you’ll be visiting before you leave home, to take care of everything from paying for a snack at the airport to taking a taxi to your hotel and tipping the porter. That way you’ll be fine for a little cash if the airport ATM is out of action or the bureau de change near your accommodation is closed when you get there.

If you have plenty of time before you travel, why not check around for the best foreign exchange deals, online, at your local banks, travel agencies and bureau de change? Also, look out for deals on exchanging any currency back into GBP that you have left over from your travels, once you’re back in the UK.

You’ll probably find exchanging money at the airport works out a little expensive, but the service is convenient.

Exchanging Cash Abroad

Once you’re abroad, the chances are that you’ll still get a decent exchange rate for your money at the local banks or bureau de change. Depending on which country you’re visiting, the host government may set the exchange rate and anyone exchanging money there must follow the same official rate 1.

When exchanging money abroad, you may need to take your passport with you. Keep your foreign exchange receipt, as in some countries, you may need to produce it before the local currency can be exchanged back into GBP at the end of your holiday. This is can be important, because in countries that have a controlled currency, you’re not allowed to take any of the local cash back out with you when you take off back to the UK 2.

Using Credit Cards Overseas

Credit card purchases that you make abroad are exchanged at the interbank exchange rate, often regarded as the best rate that you can get for exchanging currency. There’s usually a currency conversion fee every time you make a purchase in a foreign currency, but because credit card exchange rates are so competitive, you’ll probably get a better rate using a credit card, than at a bureau de change 3.

However, only use your credit card to make cash withdrawals in an emergency, as it can work out pretty expensive when you consider that there’s often a cash withdrawal fee and you’ll probably have interest to pay 4.

And to avoid having to pay much in interest, remember to pay off your credit card balance as soon as possible when you return home.

Using any cards abroad in general

Before you go off on holiday with debit, credit or prepaid cards, it’s best to let the card issuers know where and when you’ll be travelling so that you don’t inadvertently set off fraud alert systems, resulting in your cards being blocked.

It’s also a good idea to double check which card usage fees will apply if you use the cards abroad and take a note of the phone numbers you’d need to call if cards become lost or stolen.

So, which is the best currency option?

For many travellers, it will probably best to choose a combination of two or three travel money options. So for example, you might take some of the local currency with you in cash for transport from the airport, a credit card for unexpected expenses and a prepaid card to help you stay on-budget.


1: (June 2014)
2: (May 2014)
3: (June 2014)
4: (January 2012)

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