How to get the best travel money rates

Travel money may be the last thing on your mind when preparing for a much-needed holiday. While you may be focused on finding the right travel insurance or booking your flights, picking the right payment option will maximise your holiday savings. And leaving it too late to swap your cash could mean getting stung by high bank or debit card fees. Post Office research has found British travellers are collectively losing an estimated £845 million in fees when using their bank cards abroad. Its study of 2,000 holidaymakers found 45% incurred charges for using their bank card outside of the UK in the past 12 months, with the average annual bill coming in at £21.79 each.

Instead, using specialist apps, the best credit and debit cards for travelling abroad or even your supermarket could help you save money on foreign currency, freeing up your cash to spend on holiday.

Here’s how to secure better exchange rates and get the best deal on travel money.

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1. Don’t exchange currency in the airport

The general rule when it comes to travel money is to avoid airport exchanges. But, a survey by Compare the Market found that almost three in 10 holidaymakers bought holiday currency at the airport on their last holiday.

Exchange bureaux at the airport have a captive audience as once you’re in the airport there isn’t much choice about where you get your cash. You will typically get poorer exchange rates at the airport and have less money to spend once abroad.

So sort out your travel money and currency exchange before you reach the airport to make your money go further. 

2. Use the right travel money cards 

It may be tempting to just use your usual credit or debit card when spending abroad. But you could be hit with high charges on overseas spending and as much as 5% for cash withdrawals when using a mainstream high street bank card. 

According to research by TotallyMoney, some credit card providers charge huge fees – as much as £4.59 on a £20 withdrawal This represents a 22.95% charge in real terms.

Some specialist travel credit cards including the Halifax Clarity MasterCard and Barclays Rewards Visa don’t charge for overseas spending or ATM withdrawals. A number of current account providers also offer fee-free spending abroad as well as competitive exchange rates. This includes Chase’s current account, First Direct’s 1st account and Santander’s Edge account. Meanwhile, challenger banks Monzo and Starling provide fee-free spending and withdrawals abroad too.

Check the small print though as while most of these cards can be used in European or American destinations, it’s unlikely you’ll be able to use them in more far-flung places.

Another option for travel money is to use a prepaid travel card or a currency card that links with your current account from providers such as Currensea, FairFX, and Revolut. The Post Office has also launched a Travel Money Card which is available at its 11,500 branches nationwide. Similar to a travel debit card, there are no charges for overseas spending or withdrawals.  

"While it is possible to pay with your bank card on holiday – lots of banks will charge a fee for every single transaction, which can really add up," says Laura Plunkett, head of Post Office Travel.

"Card fees can be avoided by using a pre-paid travel card.

“But it’s not just card fees to consider, exchange rates can also vary daily and also between banks, so if you pay as you go on a bank card, you can never be sure you’re getting the best deal for your holiday money.”

3. Supermarket loyalty programmes

Most savvy shoppers are familiar with supermarket loyalty schemes that give you discounts on your grocery shopping.But it’s not just cheaper sausages and soap that’s on offer from these supermarket giants. Registered customers can also get lower exchange rates on travel money.

For example, Sainsbury’s customers can currently get a euro exchange rate of 1.1768 EUR for £1. But if you are a Nectar member you get a rate of 1.1792 EUR, which means you end up with more in your pocket. It’s the same for Tesco Bank and Clubcard members. Tesco Bank offers a standard euro exchange rate of 1.1725 EUR, but if you’re a Clubcard member, you get 1.1748 EUR.

This won’t make much difference if you’re taking out smaller amounts, but the savings start to add up the more you withdraw and could give you some extra spending money.

4. Shop around 

Your supermarket may seem convenient, especially if you can make a saving as a loyalty scheme member. But do shop around for the best travel money deals. Comparison websites such as Go.Compare and Travel Money Max make it easy to search and find the best deals in a couple of steps.

MoneyWeek found bureaux offering better euro exchange rates than the supermarkets, but a lot will depend on what is available near you and if you want the convenience of being able to get your holiday cash with your frozen chips.

5. Find the best travel money providers

When converting pounds to other currencies, you can either go to your high-street bank or order travel money online. We’ve rounded up the best travel money providers to help you find the best deal. Note: this is based on withdrawals of £1,000. 

Rates on Wednesday, 13 November 2024.