The UK’s biggest ever financial scam wasn’t done by dodgy blokes in back alleys, but by bankers in pin stripe.
Whether it’s euros, dollars, colons or even your dong – the pound's fragility, made worse by post-election uncertainty, means heading abroad this summer is likely to be expensive.
With £1 buying you less than a euro at some of the worst bureaux de change, it’s never been more important to maximise every penny. Here's five ways you can do that:
1. If you’re nervous, hedge your bets. Currency moves are complex. Anyone who says they know what’ll happen is a liar. I certainly don’t. So don’t focus on trying to second guess the market. If you’re worried, buy roughly half at today’s best rate, locking that in, and the rest at the best rate when you travel (I’ll explain the best ways to do each below). If you’re really nervous, ask yourself, “Would I be content with today’s rate?” If so and your real fear is rates plummeting, making your holiday unaffordable, play safe and buy more now.
2. Get near-perfect rates EVERY time you spend, on every trip. Personally, I just spend on my specialist overseas credit card which gives top rates as I spend. While most plastic adds a 3 per cent ‘non-sterling exchange fee’ abroad, so £100 of euros costs you £103 (and often other fees too). With these cards you get the same near-perfect rates banks get. So just apply now, use it to spend on every time you’re abroad, and just ensure you repay IN FULL each month – so there’s no interest. There are around 10 of these cards, and as they’re credit cards you’ll need to pass a credit score to get one. You can use my travel credit cards eligibility calculator at www.mse.me/travelcardeligibility to find which of these are most likely to accept you. If I had to pick one, it’d be the www.halifax.co.uk Clarity which gives near-perfect rates everywhere and has low ATM costs. Plus, apply now and spend abroad on it by the end of September and you get £20 cashback. Fail to fully repay and it’ll cost you 18.9 per cent APR. It’s worth noting, withdraw cash and you will pay interest even if you repay in full. It’s not too much, and it’s still better than most bureau de change – yet it does mean it’s far better to spend on the card than withdraw cash and spend that.
3. Credit cards give you section 75 protection abroad too. If you buy something costing the equivalent of between £100 and £30,000; and you pay or part pay on a credit card (not a debit or prepaid card), the credit card company is jointly liable for the entire amount. So if what you’ve bought is faulty or doesn’t arrive, you can go to the credit card firm to sort it instead of the retailer – very handy if you bought from a far flung retailer. Top prepaid cards let you lock in today’s rate. Unlike credit cards which require you to pass a credit check, anyone over 18 can get a prepaid card. You usually load them with cash, locking in a rate on that day, then spend on them later.
4. Find top rates for foreign cash in seconds. If what you really want is cash, never wait until you get to the airport, rates there are hideous. And ignore such marketing spiel as ‘commission free’ that just means they load the cost into the exchange rate. Instead just compare by simply asking how many dollars, euros or whatever you’ll get for your cash after all fees. To help visit my www.travelmoneymax.com site which compares over 30 bureaus to find the best rates.
5. A trick to buy cash now AND protect against currency swings. A final thought, two bureaux, www.travelex.co.uk and www.moneycorp.com, let you book rates for collection now, up to 14 days ahead, but cancel for free. So if the rate gets worse, you’re up, if the rate gets better, just cancel and buy at the new rate. Yet these generally aren’t the cheapest bureaux – so it’s a balance.
* Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 12 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip.