Planning a holiday? Here’s how you can protect your pounds
Since the UK voted in favour of leaving the European Union (EU) in June 2016, sterling has experienced a bumpy ride, making international holidays more expensive for families across the UK.
However on the plus side, tour operators have dropped summer package holiday prices this summer – by as much as 36% in some cases, according to TravelSupermarket. However, with no deal yet on the table with the EU and only 70 days left before the UK is set to leave, further volatility is likely to lie ahead for sterling.
If you are looking to protect your hard-earned pounds for your next trip, here are five tips from foreign exchange, currency card provider Caxton
1) Use a prepaid card
Prepaid cards offer better exchange rates, and few, if any charges when spending abroad. They also allow holiday makers to pre-load exactly how much they want to spend, meaning you are less likely to blow your budget.
2) Avoid airport bureaus at all costs
Always avoid airport bureaus for exchanging money, as they generally provide poor value. The bureaus have captive markets in the airport, leaving them free to offer travellers terrible rates and commission. Make sure you plan ahead to avoid this. Even if the rate is just 2% higher, this could be as much as £40 on the average family’s holiday spending money, Caxton estimates.
3) Keep an eye on rates
Brushing up on how the markets work and understanding what a good exchange rate is for your holiday currency always helps to make more informed decisions.
Also take note of big economic events since they can significantly influence the strength of a currency, so keep up-to-date with current affairs, and check the news headlines. It’s worth taking advantage of gains in your favour. If you see news that the pound is strengthening, it’s worth booking some of your holiday money that day!
4) Hedge your bets
Consider playing it safe: you can hedge your bets by exchanging half your currency now and half later. This can typically be done using a pre-paid currency card. That way, whether the rate goes in your favour or against you, you’ll benefit from the higher exchange rate on at least half of the amount.
5) Insist on paying in the local currency
If you are using a debit, credit or pre-paid card when travelling abroad, always be sure to pay in the local currency of the destination you’re in. People mistakenly believe that they should select to pay in pounds. However, by paying in sterling, the money will be converted twice – known as dynamic currency conversion – resulting in unnecessary charges. In some cases, this could be as much as £6 per transaction, which quickly adds up over the course of a holiday.