Travel Money

You’ve probably planned and saved for your dream vacation for some time so it’s important to get the most out of it when you arrive.  To do this you’ll need to make sure your holiday spending money stretches as far as possible, that’s why it’s important to have a good understanding of travel money and how you can the most foreign currency for your money.

It’s commonplace to plan ahead when it comes to booking our travel arrangements, but this doesn’t always seem to extend to sourcing foreign currency, with many people leaving it till the last minute in the airport or sourcing it in the resort.

Let’s take a look at what you need to know when it comes to buying foreign currency and getting a good deal for your money:

Commission

You’ll find that many companies charge a commission or handling fee to change your spending money into foreign currency and it’s important to understand how these fees work.

More often than not, you’ll be charged either a flat/minimum fee which can make it expensive when changing small amounts of money, but a good deal when it comes to changing larger amounts of money as the amount doesn’t change.

Other companies will charge a certain percentage and you could find this works out to between 1-2% which might be cheaper than a minimum fee if you are changing small amounts of money but you may also find that the currency exchange company also charges a handling fee for carrying out the exchange.

You’ll also find that an increasing number of banks and currency exchange companies offer a commission free service but beware low exchange rates which will make it a false economy.

As with any financial transaction or purchase, it’s always a good idea to shop around and do your research before deciding where to make the change.

Where to go

You’ll have plenty of choice when it comes to where to go to get your holiday spending money as many banks and travel agents offer currency exchange, along with the Post office which usually offers a competitive rate.

You can now also change your money on line and have the foreign currency sent out to you, but be cautious of delivery charges which could make it more expensive.

Travel insurance

It’s wise to make sure your travel money is protected whilst you are on holiday and for this reason, I’d recommend purchasing a travel insurance policy to make sure you are covered for loss or theft in this area.  You’ll also have the added advantage of being covered for medical treatment, cancellation, loss of luggage and theft of personal items with many policies.

That should give you a good idea of where to purchase your travel money and how to avoid paying over the odds for it, but it’s also worth looking into the alternatives to cash below:

Traveller’s Cheques

Traveller’s cheques were once a very popular method for sorting out the holiday money dilemma.  They offer more security than carrying cash and mean that you can cash in the cheques at your holiday resort as and when you need the money.

The security comes from signing the cheques when you purchase them and then again in front of the cashier at the bank or currency exchange shop in your resort.  If you lose the cheques or have them stolen, you can quickly report it and have them cancelled, with replacements being issued immediately.

The disadvantage is that you are at the mercy of local exchange rates, commission and handling fee’s so you might end up losing out financially by using this method.

Credit Cards

Another secure way of managing your travel money, credit cards allow you to spend just what you need to and not have to carry around a large amount of foreign currency.

With the advent of chip and pin and, failing this, the need to sign for your purchase, you are offered greater protection if your card is stolen, but there is still the possibility of your card being cloned if you lose sight of it in a shop or restaurant.

Another downside is that you may be charged a cash withdrawal fee for taking out money abroad and also shop owners may charge a fee for processing the credit card payment.  This can be avoided by using your debit card abroad but you will be less well protected against fraud if your card is stolen or cloned.

Pre-paid Cards

With the advent of the pre-paid credit/debit card, taking money abroad has become even simpler and much more secure.  The service allows you to pre-load the card with the amount you wish to spend and this means that thieves will only have access to this money should the card be stolen.

It works in the same way as a normal debit/credit card so you will have to enter a pin or sign when you make a payment and you can have it cancelled should it be lost or stolen.  A pre-paid card can also act as a brilliant back up in case you run out of cash and is an ideal way of splitting your holiday money up so you won’t be without money in the event of losing your cash.

As with every method of payment, there are still downsides which can include: a fee to apply for the card, cash machine withdrawal fees and charges for topping up the card.