Heading on a trip abroad? Enjoy your time away without fear of getting stung on travel money. From bad exchange rates to sneaky fees, here’s how to get the best deal on foreign currency.
Whether you’re holidaying away, studying abroad or splashing out on online payments in a different currency, poor exchange rates and hidden charges can quickly eat into your cash.
Working out the best ways to spend money other than sterling can be a headache. But, we know of some super simple tips to make the whole process much easier.
So don’t let money worries interfere with your time overseas – here are the tips you need to cut the costs and make your money go further.
All you need to know about exchange rates
Exchange rates tell you how much you’ll get when you convert one currency into another. Rates can change massively from day to day (and even hour to hour), so you can never be exactly sure how much you’re going to get.
There are two separate rates worth knowing about: how much it’ll cost to get your travel money and how much it will be to return your unused cash. Some outlets also charge commission (their price for doing the conversion).
You can check out what the current rates are on all currencies at the Post Office or a travel agent, bank or exchange bureaux.
Understanding exchange rates
If 1 GBP buys you 1.5 USD, you’ll get one and a half US dollars for every pound you convert. So if you go in with £100, you would walk out with $150.
While that might sound like you’re getting extra cash, remember it boils down to how much things actually cost at your destination! A coffee might cost you £2.50 in the UK, but you might be charged $5 in the US for the same cup, so don’t get too excited!
The best ways to take money on holiday
When it comes to travelling, it can be difficult to know how you should transport your money. Is taking cash safe? Will you be charged for paying by card?
Particularly if you’re going on a longer-term trip like on a gap year, there are plenty more ways to cut your spending beyond choosing affordable destinations – how you choose to take (and spend) money on holiday also makes a huge difference.
You might be tempted to exchange your cash before you fly to keep things simple, but it’s definitely worth knowing the pros and cons involved first.
Whether you get it all at once or convert-as-you-go, shop around for the best rate. Remember that you might have less choice once you hit the airport/get abroad.
App-based banks can make it so much easier to spend money abroad. Often, they offer fee-free spending abroad and come with added features like real-time notifications on your phone and budgeting tools.
Here are a few app-based bank accounts we recommend for overseas spending:
Starling Bank is ideal to use for overseas spending – they charge no fees for withdrawing or spending abroad and you don’t have to tell them if you’re going away.
Plus, with Starling, you have the added security of being able to lock and unlock your card directly from the app. So, if anything were to happen to it while you’re away, you can instantly protect the money in your account.
With the Revolut app, you can open a current account in minutes. Then, once you’ve got an account, you can use their handy budgeting features to manage your money from your phone.
Revolut lets you spend abroad in over 150 currencies, with just a 0.5% fee when you spend over £5,000 a month. And, they use interbank exchange rates, so their rates are the same as the ones banks give to each other.
WeSwap (as the name suggests) ‘swaps’ your currency with other people around the world at interbank rates (supporting card payments and ATM withdrawals in over 150 countries).
While WeSwap’s not technically an app-based bank, they’re an app-based money service which offers a prepaid card for you to use abroad.
They charge around 2% for swaps – but there are no charges on spending, or withdrawals over £200. Plus, if students put £50 onto their WeSwap travel card, they can get £15 free. See the ‘Student Discount’ section of their website for more info.
For in-depth info on this, check out our guide to the best app-based bank accounts.
Advice on using credit and debit cards abroad
The tables below show how much you’ll be charged each time you use your card, along with rough costs for spending or withdrawing the equivalent of £50.
Standard credit cards usually work out more expensive pound-for-pound, thanks to a whole raft of extra charges added on each time you use your card abroad. But, some travel credit cards can be worthwhile as they scrap the overseas charges.
Our top choices for travel credit cards
Barclaycard Platinum cashback plus
The Barclaycard Platinum cashback plus has no fees on overseas spending until 31 August 2023. It also doesn’t have charges on withdrawals, as long as you pay off the card on time every month. Just make sure the ATMs you’re using don’t charge.
And, better yet, for the first three months of getting this credit card, you get 0.5% cashback on all purchases. After these three months, it goes down to 0.25% cashback (again, until 31 August 2023).
Halifax Clarity Credit Card
It’s also worth looking into the Halifax Clarity Credit Card. It has no fees for withdrawals in the UK or abroad and, while it does still charge for making purchases, the rate is the same overseas as it is at home.
As with all credit cards, make sure to pay it off before the due date each month or you’ll be charged interest.
Note: You may not be eligible for these credit cards based on your credit rating. If this is the case, you can see more options in the table below, including other options for Barclaycard and Halifax credit cards.
But, to find out how to check and improve your credit rating, have a look at our guide. It could really help you nab one of these top travel credit cards.
More credit cards and their overseas charges:
Most students have a debit card, making them an attractive option for taking away on holiday – but again, sneaky charges could bite you when you get home.
Debit card overseas charges:
6 tips for spending abroad
Here are a few extra travel-money tips to help you get the most out of your trip…
- Consider splitting holiday money across cash and cards so you’ve got a back-up in case of loss or theft
- You can withdraw other currencies from some ATMs in the UK, but you’ll still have to pay any foreign transaction fees
- Let the bank know you’re going abroad. If they see any foreign transactions happening they could assume your cards have been stolen and block them…
- You may be offered the choice of paying in Sterling on your card while abroad – don’t be tricked! It usually works out much more expensive
- Don’t let cards out of your sight when paying (for example, don’t let a waiter walk off with your card in the handheld machine), and always check receipts carefully at the time the transaction is made
- Only ever withdraw cash with a credit card in a genuine emergency. As well as the extra fees for foreign use, you could start accruing interest straight away. Either way, it’s a banker’s bonus which you shouldn’t be paying for – ditch it!
It’s all well and good saving on exchange rates, but what about the holiday itself – how do you save money on that? Check out our interview with Chelsea ‘Travel’ Dickenson, a woman who went on 10 holidays in a year for half as much as the average Brit’s annual travel spend.
We’ve got good news – travelling makes you more employable! Have a read of our guide to find out how.