Beating the Weak Pound: Get the Best Deals on Foreign Cash in 2017

Posted on Thursday, 19 January 2017

While Britain's decision to leave the EU has created uncertainty in many areas of national life, one thing is for sure: the pound is not going to recover to pre-referendum levels for a long time.

For those of us who enjoy overseas holidays (and who doesn't?) this means we have to be more careful with what we spend – and especially how we exchange our hard-earned GBP for foreign currency. There's no way to directly mitigate sterling's 20% drop since June 23, but there are smarter ways to organise your holiday spending money – and secure a little extra spending money in the process.

Avoid airport exchange bureaus

If you don't know already, airport money changers offer some of the worst rates around; avoid them at all costs. Organise your foreign currency with a high street provider instead, but be sure to shop around for the very best rates. Loyalty card holders with some stores may benefit from preferential rates.

Change large sums

Some currency exchange services give you a better rate if you change a large sum of money. You might be able to take advantage of such an offer if you are travelling as a group: pool your money together and bag that better rate. If you're planning a number of trips this year, you could also exchange a larger amount – although this is a gamble since the exchange rate could go up or down in the coming months.

Consider a pre-paid card

Some pre-paid cards let you load currency on a day of your choosing, meaning you can benefit from a favourable exchange rate, then spend the cash as you need. By contrast, debit and credit cards give you the rate on the day of withdrawal (or in some cases several days later when it gets processed, which can add to the confusion). If you want to take advantage of a pre-paid card, you will need to keep an eagle eye on exchange rates.

Avoid using your regular debit and credit cards

Unless you have a special card designed for low-cost currency withdrawals abroad, avoid using your debit or credit cards when on holiday. While these cards are free or low-cost when used in the UK, providers charge hefty fees which can exacerbate your currency exchange woes. For debit cards you will be charged a ‘non-sterling transaction fee', a ‘cash withdrawal fee' – and quite possibly a fee from the ATM provider. Credit cards will charge the same, plus any interest. It's easy to see why you should only use your debit or credit card in an emergency.

MoneySavingExpert has compiled a list of charges from UK debit and credit card providers: https://www.moneysavingexpert.com/travel/overseas-card-charges (correct as of June 2016).

Take pounds with you

Another option is to withdraw the money you need in sterling from a UK bank (free of charge) and take it with you on holiday. Local money changers in some countries offer very good rates and you will have the option of changing money when the rate is good. And of course, carrying a large sum of UK cash is no more risky than taking along a wedge of foreign currency.

Give Monte Carlo a miss

OK, you may not have been planning a trip to a super-expensive principality, but by avoiding expensive destinations like Paris, Venice, Tokyo and Singapore, your money will go a lot further. Think about visiting lesser-known cities and resorts where prices are lower. Two weeks in Portugal's Algarve or Spain's Costa del Sol give you splendid weather and food, as well as decent accommodation – for the cost of a night in a Monte Carlo cocktail bar.

Go the all-inclusive route

For the free-spirited traveller, 'all-inclusive' can feel restrictive – but if you want to save money, it's hard to beat. Such deals ensure you have your flights, accommodation, food and drink all paid up-front. A little pocket money for day trips and nights out is all you need. An all-inclusive package leaves you free to explore the area, safe in the knowledge that your basic needs are comfortably met.

Protect your cash and cards with good travel insurance

There's always a risk that your money or cards could be lost or stolen while you're on holiday – an experience which could turn a relaxing trip into a nightmare. Single and annual travel insurance policies from starttravel.co.uk can help ensure you're covered for such an event.

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