We all like to think we’re great at getting a holiday deal, so it’s surprising that so many of us fail to do the same when it comes to our holiday cash, often falling back on the easiest option on offer.
Read on to find out how easy it can be to save big and get the most for your holiday money on your next getaway.
Plastic fantastic? Know your charges
Do you rely on your trusty debit and credit cards when paying for items overseas? I challenge you to tell me the charges you incur when using your cards in an ATM or at the till. Depending on the card you have, you could be paying a small fortune.
Many credit and debit cards carry a 2.99% transaction fee with some having additional one-off fees for purchases. That’s an extra £2.99 to pay for every £100 you spend.
Lloyds Bank and Bank of Scotland debit cards, for example, have a 2.99% transaction fee plus a £1.00 charge making a £100 transaction cost £103.99. Debit cards in particular tend to cost you more than credit cards and the costs are hidden – you don’t see them until they hit your statement.
However, the costs don’t stop there. Every bank also has to convert the charge from the currency you are buying into sterling. And the vast majority take this opportunity to take a little more for themselves. It’s called the currency loading fee which can add as much as 3% to the cost. So you could actually find you’re paying as much as 6% extra for the privilege of using your card overseas.
And forget trying to use your card in an ATM. Debit and credit card issuers are ready to impose an ATM charge of up to 5% or a minimum of £5 per withdrawal (on the Amazon credit card, for example) and then impose interest on top too. Your quick withdrawal of €30 from the hole in the wall has now become an expensive way to fund a round of drinks.
So, check with your card issuer today to find out what you will be charged. Or, take a look at the handy chart on the MoneySavingExpert site which lists the most popular card issuers and their charges for spending overseas.
Save big by getting the right plastic
It’s not all doom and gloom if you do want to rely on cards on holiday as there are cards that are specifically designed for overseas usage with minimal (if any) charges. They also work perfectly well here in the UK, so what’s stopping you from making the most of your money?
The Halifax Clarity card has been one of the market leaders for many years. It often gives you a better deal than even the best holiday cash outlets and there are no fees at all for using the card (although you will pay interest on cash withdrawals until you have paid the balance off). Plus, it doesn’t rip you off on the exchange rate.
Other competitive cards are on offer from companies including MBNA, Creation and Norwich & Peterborough Building Society. Compare your options on MoneySuperMarket.
And look out for the new Travelex Supercard – I’ve had the opportunity to trial this product and it has proved to be the cheapest card on the market when spending abroad. You can see a review of it here.
Think cash is king? How to get the most for your money
If plastic isn’t your cup of tea, good old cash is still a great solution. It may seem complicated when you start looking at charges and exchange rates, but if you keep it simple, you can max the cash when changing your money.
Put simply, if you’re looking to buy €1,000, you’ll want to find the place where you have to hand over as little sterling in exchange as possible. If you focus on that, charges and exchange rates are irrelevant.
MoneySavingExpert has a handy tool to compare the cost of changing your money, whether you can collect it or need it delivering. The site also advises on airport pick-ups too.
We ran a quick comparison and found we could save £29.37 by buying €1,000 with the best-buy company versus the most expensive – not bad for a couple of minutes spent online.
Don’t like carrying a lot of cash around with you?
Carrying lots of money can be a risk, so it’s worth thinking about pre-paid cards that you can load cash on to and then use like a normal debit card with a pin number.
You can’t spend more than you’ve put on them so they’re a great way of keeping track of your budget and you can top them up online when you need to.
You can even use them in an ATM to get actual cash out as well (but find out if there are any charges for this first). They come in various currencies including euros and US dollars.
But, as with any cards, compare your options before you apply as some cards are better than others. Caxton and Fair FX tend to offer good buys in this category.
My top holiday money tips
- Don’t put all of your eggs in one basket – carry a market-leading credit or debit card for use overseas, a pre-paid card and also some cash. Don’t rely on just one form of payment.
- If you are paying by card overseas and you are offered the chance to pay in pounds, refuse and pay in local currency. Paying in sterling will cost you more as the retailer may take an extra cut on top of the charges your card issuer will be making
- Ensure your money is protected – make sure you have a travel insurance policy that includes travel money cover. If your money is lost or stolen you will have some protection.
- Use safety deposit boxes in hotels and keep your cash and cards locked away. When out and about only carry the cash and cards you need.
- Keep a note of your card numbers and telephone numbers for calling your bank from overseas with you in case your cards are lost or stolen.
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