Understanding Holiday Money: What To Know Before You Go [AD]

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After the ‘stay home’ messages of the last year or so, now that travel restrictions are beginning to ease, it’s probable that a lot of us are starting to think about dusting off the suitcases and heading on holiday.

Along with where to travel to, which travel company to book with and which novels to choose for poolside reading, sorting out travel money is one of the things it’s important to think about before jetting off.

Understanding holiday money means you can be totally prepared for your trip and make sure you’re getting the best value possible when exchanging or spending.

Here’s what you need to know:

What is an exchange rate?

An exchange rate is simply the amount of one currency you can exchange for another. For example, if you’re travelling to the States from the UK, this would be the amount of USD you’d get in return for your pound sterling.

So for a 1.4 exchange rate, £10 would give you $14.

These exchange rates can fluctuate daily, so checking the daily exchange rate can help you get the best deal when buying foreign currency.

What are buy and sell rates?

A ‘Sell’ rate is the exchange rate at which you’ll be sold foreign currency. The ‘Buy’ rate is the exchange rate at which foreign currency providers will buy back any of your unspent travel money.

These rates can also vary depending on provider, so where is it best to get travel money?

Where can you get your holiday money?

There are lots of places available that you can purchase travel money including:

• Your bank
• The post office
• Bureau de change
• Supermarkets
• Currency websites
• Travel agents

It’s worth spending some time looking at all the different options to find the best deals. Some places will charge higher fees than others and use varying rates, so checking different options will help you get the best value.

You can even get your travel money delivered to your home if it’s more convenient. 

Don’t buy at the airport

Although it might seem to be the obvious and most convenient choice, you should try and avoid changing your money at the airport.

Travellers leaving their currency conversion to the last minute and using airport currency exchange counters have little choice at this point, leaving the airport exchange free to offer less competitive rates and charge higher fees. 

Sorting out your holiday money in advance is a much better value option.

How to pay for your holiday money

If you’re wanting to use card to pay for your travel money, it’s best to choose a debit card over a credit card. Your bank won’t charge you any fees and will treat it like a normal transaction or cash withdrawal.

However if you use a credit card you may be charged a cash advance fee, and may also be charged interest.

What about using your card abroad?

You might wonder about whether it’s easier to simply use your card abroad, and that’s certainly an option. It means you don’t have to worry about cash being lost or stolen and it’s a convenient way to pay in places such as shops and restaurants. 

Check with your bank before you go, as there will probably be non sterling transactions fees for using your card abroad. If you do use your card, it’s best to pay in the local currency to get a better exchange rate.

Exchanging cash before you go means you don’t have to pay any further fees and may help with budgeting while on your trip, but having both options available may help give more of a feeling of security.

Wherever you travel and however you choose to handle your holiday money, being prepared and sorting it in advance leaves you free to enjoy your holiday – worrying only about which cocktail to choose next, not how you’re going to pay for it.