Travelling abroad is always exciting, but there’s one thing that can sneak up on you: exchange rates.
For British travellers, the pound’s value can swing wildly due to global uncertainties, increasing inflation or geopolitical events. These shifts can seriously affect how much you’ll spend on your holiday.
Learning how exchange rates work and finding the best deals will help stretch your travel budget further.
How do exchange rates work?
An exchange rate tells you the value of one currency compared to another. So, if you’re off to Europe, you’ll see how many euros you get for each British pound. If the pound gets stronger, your money goes further; you’ll have less to spend if it weakens.
It’s smart to keep tabs on the financial markets using a trading platform or a currency converter site to stay ahead.
Getting the best rates when travelling
Here are some tips to help you get the best rates and avoid the pitfalls:
Avoid changing your currency at the airport
Airports are among the priciest places to exchange money, with last-minute exchanges often charging high markups and extra fees.
Use comparison tools
Plenty of online tools and apps let you compare exchange rates from different providers. Some fintech platforms even allow you to load up your account with multiple currencies before your trip.
Get a prepaid travel card
These can be a good choice for UK travellers. You can load these cards with your desired currency at a fixed rate, protecting you from potential rate fluctuations. Plus, they often come with little to no foreign transaction fees, making them a great way to budget for your trip and avoid hidden charges.
Be wary of using credit and debit cards abroad
While convenient, using your regular UK credit or debit card abroad may incur hefty foreign transaction fees, typically ranging from 2% to 3% per purchase. Look for cards that offer fee-free spending abroad. These often also provide better exchange rates than what you would get from physical currency exchange services.
Beware of dynamic currency conversion (DCC)
When paying with your card abroad, you might be offered the option to pay in pounds instead of the local currency (Dynamic Currency Conversion). This is best avoided as it usually comes with unfavourable rates and extra charges.
Hidden fees to watch out for
These may include commission fees, handling fees or transaction charges. Reading the fine print when exchanging currency or using financial services abroad is crucial. If you plan to withdraw cash from ATMs while overseas, ensure that your card provider does not charge hefty foreign withdrawal fees, which can quickly add up.
Understanding how to manage your money when travelling is vital to avoid unnecessary costs. By planning and staying informed about the current economic climate, you can ensure you’re getting the best rates.
