I’ve been out filming Superscrimpers in Newcastle. I’m leaving amazed. First by the amount of holidays people appear to take. Not one single person I spoke to said that, what with times being tough they weren’t taking a foreign holiday this year. Instead they mostly seem to be going to Thailand for three weeks or Florida for two.
And second, given how much they seem to travel, how unsavvy they are about currency exchange. They all shop around endlessly for flights and for hotels. But when it comes to buying their dollars and euros? They do it on the high street or, worse, at the airport.
They aren’t alone of course – an estimated 1.7 million people did the same last year – but that doesn’t make it any less nuts. I spent some time scanning the windows of Newcastle’s travel agents for their exchange rates: in some cases the spread (the gap) between the rates at which they buy and sell was getting on for 10%. And at the airport, the rates are so utterly rubbish that you can end up paying £12 over the odds for every £100 changed, according to Moneysupermarket numbers. Yes you did read that right.
The UK public has become much more financially aware over the last few years – as the banks are learning to their cost – but it looks like currency has remained something of a blind spot. Given how little the pound now buys at the best of times (it has fallen over 15% against the euro since 2008) that’s not a good thing.
So what do you do instead? If you must have currency in cash in your hand before you go, order it online and pick it up at the airport. But otherwise get a pre-paid card. These have been around for a few years now, but have yet to become the default option for all overseas spending, even although they really should be: only one of the people I spoke to in Newcastle even knew they existed.
Pre-paid cards are very simple. You buy your foreign currency and load it on to your card: this is extremely easy – once you have an account set up, you can even arrange it via a text message with the main companies. Then you use the card abroad just as you would a normal debit or credit card. The exchange rates tend to be very competitive and while the charging structures are slightly different for each card, the best offer the cheapest – and possibly quickest – way of buying foreign currency there is in the retail market.
My long-term favourite is Caxton FX which comes with no charges at all, but the FairFX card is also very competitive. Its exchange rates are often very slightly better than those at Caxton. But it charges a fee (€1.50/$2) when you withdraw cash from an ATM, something which irritates me given that one of the main points of having a pre-paid card is ready access to cash.
Finally, note that carrying a pre-paid card is a great deal safer than carrying a whole load of cash around with you: they come with a PIN. You can – and if you ever travel abroad you probably should – compare all the main cards at moneysupermarket.com. Otherwise, if you want to see all the best rates across the board you can compare pretty much everything at Compare Currency