Checking exchange rates is less fun than packing your suitcase, but making sure you get a good deal on your travel money before you jet off on holiday could buy a couple of extra cocktails on the beach! Here’s our guide on getting the best deal.
Sorting out your travel money before you jet off to sunnier climes often marks the start of your holiday, but when and where you change your cash can make a real difference to your spending power abroad.
You need to make sure you get the best deal - here's what you should check before you buy.
Where & When
Some people visit their banks, others leave it until the airport before sorting their travel money; however doing either is likely to mean that you get less foreign currency for your cash.
The airport is the travellers' last resort when it comes to changing travel money. Forex companies know this and take advantage of the situation by upping commission fees and dropping exchange rates at in-airport branches.
Banks, on the other hand, rely on customer loyalty so offer lower exchange rates in branch. Again, this means that you get less foreign currency for your money.
Thankfully, if you get organised in advance, a hugely competitive forex market means that you'll have the time to make sure you get the best deal on your holiday cash.
Whether you order it online and get it delivered, or arrange to pick it up in a store (or even at the airport) shopping around is key when it comes to getting the most for your money.
Rate chase
The exchange rate will determine how much your pounds are worth in the local currency and should be stated clearly by any exchange office. Finding the best exchange rate possible is an essential start when buying foreign currency.
Most companies display their rates in decimal format – so that £1 buys say 1.2 Euros - this means the higher the number, the more money you will get per pound.
Even if a company offers 0% commission and free delivery by courier, if their exchange rate for the currency you want to buy isn’t competitive then it's likely you'll be able to do better elsewhere.
If you are going away with a group then you may want to consider buying your money in one go, often there are exchange rate thresholds where the more you buy the cheaper it becomes. This is generally because the cost to the provider falls when they purchase in bulk. So check if there is a currency threshold which may make you eligible for a better exchange rate.
Don’t be fooled by commission free deals
Lots of travel money providers advertise a commission-free foreign exchange service as a selling point, but you shouldn’t assume that this means you’ll automatically get a better deal.
While the fact that you won’t be paying commission is a good thing, it’s likely that they’ve built their fee into the exchange rate. This means that you end up with less as your pounds are deemed to be worth less.
If a forex company doesn’t offer a 0% commission service then you will need to factor in the rate they will charge into your calculations.
In order to be able to compare deals on a level playing field you need to get a full quote. Finding out how much currency your pounds will buy after commission and any other charges are deducted is the only way of accurately comparing prices.
Once you have several quotes you should be able to see clearly what the cheapest option is.
Check the buy back rate
While it can clearly be common sense to take a little extra cash away with you on holiday, just in case, it can often mean that you come home with money you haven’t spent.
Checking if a company will buy back any unwanted currency before you travel means that you won’t need to worry about finding somewhere that will swap the cash later.
Often when you purchase travel money the company you buy from will offer to buy back any leftover cash at the same rate as you purchased it - an offer which could save you money when you get back. However if rates have changed then checking other suppliers may also be wise.
Find out how you’ll get your hands on your holiday cash
Many companies - particularly those that offer their services online - will delivery your travel money to your home. However, there is often a charge (generally around £5) for this service; if you’re only purchasing a small sum of money this can represent quite a significant amount.
If delivery to your door is a necessity then checking the courier fees charged by the various companies and factoring this into your comparison is a must. Often those offering free delivery specifiy a minimum order requirement which is again worth checking.
Alternatively some providers give you the option to order online but collecting your currency in person either from the airport or a branch. This is worth investigation as often this will help you to avoid any delivery charges while still giving you the discounted online rate.
Money in your pocket
Ultimately when buying your travel money you are looking to get the most currency possible for your money. Getting quotes for the total amount including fees and commission will enable you to accurately compare your different options. Essentially knowing how much foreign currency you will get for your cash is the acid test.
