Yahoo Finance Best and worst ways to get your holiday money
Fees for using your card and spending overseas vary hugely between banks
As schools finish for the summer, parents all over the UK will be desperately rushing around, trying to find passports, buy half a wardrobe for their growing kids, and sort out their holiday cash. In the rush, there are bound to be an awful lot of them who leave it to the last possible second, and end up exchanging their cash at the airport. Unfortunately, this is the worst possible way to get hold of your holiday money: you’ll spend over 10% more than you would with the cheapest options.
Those who arrive in their holiday destination without getting hold of any local currency also run the risk of falling back on the second worst way to spend overseas – using the wrong credit or debit card. In most cases, your credit card provider will add an extra fee onto any transaction that’s not in pounds. This will tend to be about 3% – so a £50 spend will raise a fee of £1.50. Most debit card providers charge this as well, and then add another fee of between 50p and £1.50 for every transaction. If you use your cards to withdraw cash from a cash machine, there’s a separate fee for this too.
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However, don’t write cards off, because these are usually the cheapest ways to get your holiday money – you just need the right ones. They offer brilliant exchange rates, and you can get hold of a credit card offering fee-free spending and withdrawals. Just check whether your card charges on day one for withdrawals – like Halifax Clarity – or whether you can beat interest charges by repaying in full and on time – like with Barclaycard Rewards. If you have time to make an application before you travel, they’re worth considering.
If you’re prepared to open a new bank account, you can also get fee free spending and withdrawals with a number of debit cards – including First Direct and Starling. You don’t necessarily have to switch current accounts entirely, because you can open an account just for your holiday money. However, you need to leave yourself enough time to apply for the account.
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If you want to travel with cash, you have three choices. You can order online for delivery, order to collect, or pick it up from a bureau de change without ordering. If you’re not travelling for a few days, and you’re ordering over £500, you’ll usually get speedy delivery free, and the best available rates.
If you’re buying less than this, it’s often more cost effective to collect and avoid the delivery fee. However, rates will depend on what’s available in your local area. You’ll always get a better deal if you book the exchange in advance than if you just turn up. This applies to the airport too, so even if you’ve left it too late for anything else, at least book your exchange a few hours before you travel to the airport.
In each case, if you have currency left over when you return, you’ll get less from a buyback service than you spent getting the money in the first place. It’s why so many people turn spending every cent into a fine art, and so many others have a deal with friends or family to sell them their leftover currency when they return. Of course, with inflation running so high around the world, the chances of you having any cash left over after a family holiday are likely to be fairly minimal.
Sarah Coles is head of personal finance at Hargreaves Lansdown and host of the podcast Switch Your Money On.
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