I am going on holiday in three weeks and I want to take out £500 worth of Euros to spend while I’m abroad – but I don’t know where or when to take it out to get the best rate.
Would I be better off doing this at the airport before I leave, or should I wait until I get to my destination?
Helen Kirrane of This is Money replies: When exchanging cash ahead of a trip abroad, it is vital to secure a decent exchange rate.
When and where you buy your foreign currency has a huge bearing on the amount you will get for your pounds.
Prefer cash? Experts say to avoid the airport and give yourself enough time to shop around to get the best deal on foreign currency
The general consensus is that you are best off picking up your foreign currency before you travel, and avoid taking it out at the airport at all costs.
Exchange rates fluctuate, though, so picking the perfect time to exchange your pounds is tricky.
We asked two money experts for their advice on getting the best bang for your buck at the bureau de change.
Try currency ‘hedging’ for the best deal
Simon Phillips, managing director at currency exchange service No1 Currency, replies: As you’re not travelling for a few weeks, you can give yourself the best chance of getting the most favourable exchange rate by doing something that currency pros call ‘hedging’.
Start by exchanging £250 – half of your spending money for your trip – now.
Start by exchanging £250 now. Then, keep an eye on exchange rate in the weeks leading up to your trip
That way you can be sure that you won’t miss the best rate for this half of your budget if the exchange rate moves against you in the coming weeks.
Then keep an eye on the exchange rate of your chosen currency over the weeks leading up to your trip. If you see the pound strengthening, that could be a good time to exchange the remaining £250.
That way, if rates improve between now and the day you exchange the second half of your money, you’ll pocket the difference.
Equally, if the pound weakens between now and then, you’ll have limited your exposure by exchanging the first half of your spending money at today’s more favourable rate.
Do not buy money at the airport
Helen Kirrane replies: The golden rule when it comes to taking currency out is do not do it at the airport, either before you fly or when you arrive at your destination.
This is because the airport bureau de change kiosks know they are holidaymakers’ last port of call, and they can whack exchange rates up to make profit.
You will receive a far worse exchange rate than other places, unless you order it in advance.
It is also usually worth avoiding the banks. You’ll normally get a better rate at a high street currency exchange specialist, or a supermarket bureau.
The same goes for your journey home, if you want to exchange left over holiday cash back into pounds. You can exchange it on the high street, but should also consider online services as they tend to offer some of the most competitive rates.
They can also provide details of nearby outlets where you can drop off your unspent money and exchange it for British cash.
Andrew Hagger, founder of Money Comms replies: If you are thinking of taking physical currency with you on holiday then do not buy it at the airport, it is a big no no.
It may seem convenient, but it is an extremely expensive way to buy or sell currency.
Avoid: Airport bureau de change kiosks tend to have the worst exchage rates when it comes to taking out currency
How do I know which bureaus have the best rates?
Helen Kirrane replies: With the airport bureau de change ruled out, picking up your foreign currency before you travel is usually the best option.
Sites such as Money.co.uk and Compareholidaymoney.com will help you locate the best deals on offer for taking cash out.
The bureaus include high street names such as Eurochange, Sainsbury’s bank, Asda, M&S and John Lewis.
Most specialist currency exchange companies will let you pick cash up in person – and ordering in advance can boost the rate.
Better still, you don’t have to pay for it until you pick it up.
You can also order order it by post, and some high street and supermarket bureaus like Eurochange, Sainsbury’s bank, ASDA and John Lewis will deliver it for free if it is over £500.
Andrew Hagger says: Whenever you are buying currency you need to factor in two things – the exchange rate and any commission charge.
It’s quite common to see exchange bureaus heavily advertising a 0 per cent commission rate only to be charging a non competitive exchange rate.
Try not to leave it until the last minute
Helen Kirrane replies: Most of us leave sorting out our holiday spending money to the last minute, limiting our options and inevitably pushing up the cost.
Planning ahead is one of the key ways to ensure you get the best deal on your currency order.
If you leave it too late, you won’t have enough time to ensure you are getting the best rate.
As you have three weeks before your trip, you have enough time to shop around and lock in a good rate.
Don’t use a credit card
Helen Kirrane replies: Finally, you should avoid using a credit card to buy currency.
This will be classed as a cash withdrawal, which typically comes with fees and hefty interest as soon as you make the transaction.
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