BRITS waste £245m of precious holiday money every year when they buy their currency outside of the UK, MoneyCorp research shows. And that doesn’t even count the cash wasted by those buying it in the UK at uncompetitive prices. While most of us know we’ll be ripped off if we wait until we get to the airport to change our cash, fewer people know how to get the best deal. Moneysavingexpert.com has done the research and it turns out that there are three good ways to get the best rates. These are specialist credit cards, pre-paid cards or shopping around for the best priced pre-ordered currency.
Moneysavingexpert.com says the best of the three is “the perfect plastic” – a specialist credit card. While most ordinary cards add 3 per cent to the exchange rate and insert a few other charges, specialist cards do not. This can make an enormous difference. Compare the fees charged on spending £1,000 a year on foreign currency and withdrawing a further £750 in cash, using an Intelligent Finance debit card with the Halifax Clarity credit card: Intelligent Finance charges over £120, while Halifax Clarity asks for just £8.
Lewis explains that simply finding a regular bank account that offers cheap spending abroad isn’t worth it: “The real question is, do you want to change bank account or just get cheap spending abroad? If the latter, you could just get a credit card and set up a direct debit to clear the balance each month.” Clearing the balance, he stresses, is extremely important. Otherwise, you could be stung by punitive fees. The best – and worst – of these cards are ranked on the right.
The security conscious and those suffering from a bad credit rating, however, might prefer the slightly more costly pre-paid card option. These cards are loaded up with the amount of cash you want to spend while you’re away. And if you lose it, most providers will replace the card with all funds intact for a fee of around £10. Moneysavingexpert.com’s favourites are the Fair FX, Caxton FX and Travelex Cash Passport cards. The charges vary on each of these. While Fair FX offers the lowest fees, we love Caxton FX for its free cash machine withdrawals and the low cost it charges for its customer service helpline.
Cash may not be the most cost effective or safe way to get your hands on foreign currency, but it is pretty essential. With rates changing all the time, it is best to log yourself on to www.travelmoneymax.com, compare the prices and then get it delivered to your home. Don’t panic, you haven’t run out of time. You can still order cash online and collect it at the airport. Sounds silly, but it’ll cut the cost quite substantially.
THE BEST AND WORST FOREIGN EXCHANGE CREDIT CARDS
The best cards for spending abroad:
l Halifax Clarity (credit card)
l Sainsbury’s Gold (credit card)
l Fair FX (pre pay card)
l Caxton FX (pre pay card)
l Travelex Cash Passport (pre pay card)
The worst for spending abroad:
l Halifax Debit Card
l Lloyds Debit Card
l IF Debit Card