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Holiday currency exchanges: How not to get completely stung by fluctuations

September 7, 2016
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Holiday currency exchanges: How not to get completely stung by fluctuations


Following the Brexit result there has been much talk about the impact on foreign currency exchange rates – particularly the impact of when we go on our travels.

Having recently returned from Spain, my friends and I certainly noticed the increased cost of travelling in Europe. Within the space of a few days of exchanging our GBP, each of us had very different EUR conversion rates ranging from 1.06 to 1.13.

We cannot protect ourselves completely against the changes in rates, however there are ways to help minimise the risk. Here I summarise the “top tips” for minimising your exposure to foreign currency exchange fluctuations.

  1. Pre order your currency and avoid exchanging your currency at the airport.

Obvious to many, and sometimes this cannot be helped, but exchanging your currency at airports is very costly, with airport based bureaus costing you an average of 15-20% more than if you have pre ordered.

  1. Order a larger quantity of currency.

It is well known that the larger the amounts being exchanged, the better the rates that can be obtained. Clearly this is more useful if you know you will need the larger amount of currency (i.e. if there is a possibility that you will need to withdraw/exchange more whilst away). However, if travelling with friends or you know others travelling to locations with the same currency, you could combine your foreign currency transaction to take advantage of improved rates.

  1. Use “Local Currency” option when making card payments abroad.

This can often be seen as a tricky scenario when abroad and making a card purchase, as the vendor will offer you either to pay in the local currency or pay an amount they have converted into GBP. Many banks/card providers will still charge you for making a foreign transaction whether it has been converted into GBP or not. The vendor will have already factored a cost of conversion into the GBP amount meaning that you could be effectively charged twice for your transaction if you choose the converted amount!

  1. Choose a bank/card provider with no/low charges for foreign cash withdrawals.

Shop around for cards with low rates/fees for international payments. Speak to your own bank first as they may have an offer personalised for you. There are also many price comparison websites that can search this for you. One key point to note is to avoid using your debit card to make foreign transactions wherever possible, as these are often more expensive than using credit cards for the same transaction.

  1. Exchange unused foreign currency with friends/family.

Often we come home from our trips with left over foreign currency. It is common knowledge the the sell price exchange rate is far lower than the buy price with most travel money bureaus, and the moment you return from your holidays those based at the airport are one of the first to try and take advantage of that with the strategically placed hubs. If you know any friends or family that are due to go away and need the same currency, why not exchange with them? Clearly you will need to agree a rate between you, but the most likely outcome is that it could benefit both parties compared with directly exchanging with travel money bureaus.

If you bear in mind some of the above points for your trip abroad, you should not be caught out by the additional charges and to an extent the different rates out there – an added bonus whilst enjoying your holiday!

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