The best place to get your holiday cash after pound free-fall
Fears of a no-deal Brexit have sent sterling into free-fall against the euro and US dollar this week. Sterling dropped more than 4 per cent on Tuesday in its worst month since October 2016 on an increasing probability of the UK leaving the EU on 31 October without a deal.
Although the official interbank rate is still just above €1, for now at least, poor rates and commission charges mean some foreign exchange outlets are quoting prices where £1 is worth less than €1.
For example, ICE at Heathrow airport was charging £117 for buying €100 – making each pound worth just 85 euro cents.
Sterling also hit a fresh two-year low of $1.2120 against the US dollar on Tuesday, before staging a moderate recovery.
Alana Parsons, travel money expert at Caxton, said: “Although the rates are at some of the lowest we’ve seen in an extremely long time, it is no excuse for bureaux at airports to rip their customers off. It is usual to see 2 to 3 per cent spreads on exchange rates for cash, but 8 to 10 per cent is daylight robbery regardless of the amount being transacted.”
Save money by buying currency online
However the pound is performing versus other currencies, you’ll never get a good deal by waiting until you’re at the airport to exchange your holiday money. The best rates are almost always found and reserved online – with currency either collected, delivered to your door, or collected at the airport.
You can compare what’s on offer at https://travelmoney.moneysavingexpert.com/
If you’re exchanging £500 for euros, here’s what you’d get if you ordered online and collected your currency at the following bureaux:
- €538 at Debenhams (1.076)
- €536.05 at Tesco (1.072)
- €536 at Asda (1.072)
- €535.75 at Tui (1.072)
- €535.60 at Post Office (1.071)
Some foreign exchange bureau offer a lot less. For example, M&S Bank would give you just €523.75 for £500 – that’s €14.25 less.
If you opt for having your currency delivered, you’ll normally have to pay a delivery charge between £2.95 and £4.99 for orders under £500 or £600 depending on the bureau.
Take the right plastic
Obviously carrying large wads of cash on holiday is a security risk so you might prefer to pay by card instead. But before you pack your debit or credit card, check if there are extra fees for using it overseas.
Most (but not all) credit and debit cards charge foreign loading charges up to 2.95 per cent plus fees for card transactions and withdrawing cash from the ATM. You should also check the exchange rate you’ll be offered.
Sarah Megginson, business development manager at ClearScore, said: “Some travel credit cards – for example the Barclaycard Platinum Cashback Plus card, the Tandem 0.5 per cent cashback card and the Halifax Clarity Credit Card – offer completely fee-free foreign purchases, some of the best foreign exchange rates and have the added benefit of protecting your purchases.”
When it comes to debit cards, only four current accounts don’t charge any foreign transaction fees for overseas use. Metro Bank, Monzo and Starling are all free accounts, while Nationwide Flexplus has a £13 monthly charge.
These accounts also let you withdraw cash for free abroad (although Revolut and Monzo only let you withdraw £200 a month for free and then charge 3 per cent and 2 per cent respectively).