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Holiday Money: Foreign Currency, Traveller's Cheques Or Prepaid Cards?

holiday-money

When you're going to a foreign country, you are presented with a whole host of different options when it comes to getting your hands on the right currency. Working out which method suits your needs best can be a minefield, as can calculating whether you're getting the best deal.

What are the pros and cons of foreign currency?

Foreign currency might just be the most convenient way to pay for tickets to attractions and restaurant trips while you're abroad. You'd be hard pressed to find an establishment that doesn't accept notes and coins, after all.

On the other hand, this might be the least secure option. You're often carrying around large sums, meaning you feel extremely self-conscious when walking around. And, if you're unlucky enough to lose your money or be a victim of theft, the only real way to get it back is through travel insurance.

If disaster should occur and you don't have cover, there is not just the upset to deal with - you'll need to draw out extra money for the rest of your holiday. Therefore, you might be forced into borrowing or paying high bank fees, meaning you are left facing debt solutions when you return home.

Foreign Currency

How do I ensure I'm getting the best deal?

Many people go to their nearest travel agent and exchange as much as their budget allows into foreign currency. However, this can be somewhat of a lucky dip, since the rates offered by different companies can vary significantly.

One of the best ways to ensure you're getting the best deal is to look at the notices in bureau de changes in your local supermarket and on the high street. Look for the figure which represents what £1 (1 GBP) is equivalent to - the bigger the better.

You can then search online to see if you can get more for your money. Travelmoney.moneysavingexpert.com compares the rates offered by numerous different websites, including Travelex and HSBC, so that you can find out the best rate without the legwork.

However, it is not just the exchange rate that you should take into consideration. Some companies charge commission fees, in the form of a set charge or a percentage, while there could be a delivery fee when you use online retailers. Take all costs into account before making a decision.

What are the pros and cons of traveller's cheques?

Traveller's cheques are a more secure, if slightly less convenient way to pay for things while on holiday. The main trouble with them is that you have to take time out of your day to find a venue where you can swap them or use them in place of money.

However, because they can only be cashed in by the signatory, there's not too much need for worry when they are lost or stolen. The company you bought them from will usually replace them within just 24 hours, as long as you've noted down the serial codes somewhere safe.

How do I ensure I'm getting the best deal?

Last year, MoneySavingExpert research revealed that traveller's cheques tend to offer the worst exchange rates, meaning they probably aren't the best option when you're trying to save money.

Most retailers also have a minimum order, meaning that they might not be suitable if you aren't planning to spend much. However, if they're your preferred option, you should compare the rates at retailers like the Post Office or use the Money.co.uk comparison tool.

What are the pros and cons of prepaid cards?

Using your usual debit and credit cards while on holiday can result in expensive charges, and it can also make it difficult to budget. However, you can enjoy the convenience and security offered by these products without this compromise by using a prepaid card.

Retailers will simply load the balance of foreign currency that you purchase on before you jet off. They come under the Visa and Mastercard networks, meaning a range of establishments and ATMs will accept them across the globe.

You shouldn't rack up any fees as long as you're using the local currency, there's no way of going into an overdraft, and they are secure thanks to PIN protection. In some instances, you can claim back money if you are a victim or fraud.

cards

How do I ensure I'm getting the best deal?

There are often a lot of terms and conditions to read through when you use these cards, and usually a host of different fees. You must take into account all of the different charges to work out whether this option is cost effective.

MyTravelMoney.co.uk has an online comparison tool you can use to find out the different exchange rates and fees being charged by different providers. Think about how you will use the card in order to work out which is the best deal for you.

Stef has worked through a debt solution plan with the help of Debt Free Direct, she now writes articles on money saving tips and advice to help people avoid getting into debt; or save money to pay off their existing debt.

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Guest Thursday, 21 March 2019
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