Unfortunately, a weakened British pound means that buying foreign cash is more expensive than in the past. It’s never been so important to maximise the value of your foreign spending money and search for the best euro exchange rates.
People heading to Europe and looking to take £500 spending money will receive around €70 less than they did two and a half years ago. Similarly, people going to the US with the same £500 will receive $50 less. This is a significant drop in spending money and requires Brits abroad to be more frugal than ever.
How can holidaymakers maximise the value of their holiday money?
The simple truth is that holidaymakers can do nothing about the fluctuations in exchange rate. That can be left to politicians and bankers to influence. However, they can shop around and the difference in exchange rates offered by suppliers can ensure that they get the best exchange rates on the market, namely the one nearest to the actual exchange rate.
Foreign currency can be expensive
Buying holiday money, especially smaller amounts, can be an expensive activity. A recent mystery shop carried out by comparison site MyTravelMoney.co.uk showed airport bureaus applying margins of up to 15% of the amount of foreign currency being exchanged. That’s a hefty price for converting your pounds to euros, baht or dollars!
An explanation of fees
It’s important to understand the fees that you’ll be charged when you convert pounds into euros. There are two main types of fee.
1. Fees and commission
These are normally fairly transparent and are tiered charges based on the amount of money that you are changing. For example, you may be charged a flat ‘commission’ of £5 for converting your GBP into EUROS. In addition to the ‘commission’ applied, the real cost of a travel money purchase lies in the exchange rate offered.
2. Profit built into the exchange rate.
The ‘exchange rate markup’ is essentially the difference between the exchange rate you receive when you exchange currency (sell rate) and the actual exchange rate at that time (mid market or interbank exchange rate). The smaller the margin applied, the better the exchange rate.
Don’t get caught in the ‘Commission Free’ trap
It’s very easy to see headlines stating fee-free deals, get carried away, and go with the provider without assessing the true value in the travel money purchase. Often these fee-free deals are in reality very expensive. Zero percent commission with a horrendous exchange rate markup does not equate to a good deal!
What else can you do to get more money?
The pound has fallen dramatically against the dollar and the euro, but it’s actually done quite well against some other currencies. In the last 12 months, the pound has gone up against currencies in Japan, Brazil, South Africa, Iceland, and the Czech Republic. If you want more spending money in the local currency for your £500 then it might be worth considering one of these countries as a holiday destination.
Online travel money deals beat the airport and high street
Many people change their money at the airport, either in the UK or when they arrive at their destination. This is the absolute worst place to change your money. Typically, the best value travel money deals can be found online, where you can save up to 10% versus the airport bureaus. You will get better rates than at exchange counters in supermarkets, better rates than in the bank, and most definitely better rates than in the airport. Most online travel money companies offer home delivery of currency too, for added convenience.
MyTravelMoney.co.uk top tips
- Online suppliers will beat the high street and airport bureaus
- Dismiss 0% commission slogans, it’s marketing guff
- Focus on the exchange rate markup travel money suppliers add
To compare regulated travel money companies in real-time, visit travel money comparison site MyTravelMoney.co.uk