Many of us overlook organising our holiday money before heading on holiday. We either get it in a rush at an airport travel-exchange desk or just use our day-to-day plastic abroad. But this could be costing us a lot more than we think.
Buying currency at the last minute at the airport could cost as much as £80 more per €1,000 due to fees and poor exchange rates. Fortunately, there are plenty of simple ways to cut the cost.
If you prefer to spend on plastic when you are abroad then you need to watch out for overseas card usage fees. Many credit-card providers will charge you as much as 2.99% per purchase when you use your card abroad. To avoid this, your best option is Halifax's Clarity credit card. It charges no foreign usage fees on purchases and it uses the MasterCard and Visa exchange rate, which is only fractionally higher than the spot price the rate at which banks exchange currency between themselves. Just be aware that the card has a 12.9% APR. That isn't too bad for a credit card, but if you don't pay off your holiday spending straight away you'll wipe out any savings you've made.
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If you prefer simply to use cash machines when abroad, check the fees first. Most banks charge more for withdrawing cash abroad up to 2.75% per withdrawal. The best debit card for holiday use is Norwich & Peterborough Building Society's Gold current account card. It has no cash withdrawal, transaction charges or handling fees. This is a better deal than our previous favourite, the Nationwide card, which now charges a 2% fee. But you will have to have opened Norwich & Peterborough's Gold current account first and deposit at least £500 monthly.
The third option for those prepared to do a bit of planning is a pre-paid card. You load them with money before you go then use them like a credit or debit card while you are abroad. The two main players in this market are FairFX and Caxton FX. FairFX's card charges no fees on purchases but a €1.50 fee per euro cash withdrawal, whereas Caxton FX has no cash machine withdrawal charge, but its exchange rate is slightly worse. If you are going to buy a pre-pay card be careful how you do it. FairFX charges £9.95 when you register the card, but you can dodge that if you buy via MoneySupermarket.com.
Finally, if you leave your currency plans to the last minute but want to take cash with you, order it online. Even if you only order the day before and collect it from a Travelex desk at the airport, you will still get a much better exchange rate than if you simply buy it direct from the airport desk.
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