Have you noticed that when you are abroad and use your credit cards, they put a sneaky charge on for the honour? Or, when you take cash out of an ATM, you get charged a fee by the bank? And the same goes with getting cash from a bureau de change or similar. Bottom line is, when you’re travelling, you don’t want to be paying commission on your foreign currency. You want to keep as much money in your own pocket as possible for holiday spending money! So, how exactly can you avoid it?
Now, I’m by no means a financial advisor, so please do ensure you do your own research too, but here are a few ways I’ve found helpful in avoiding those unnecessary charges.
Get a travel credit card to avoid getting stung by nasty fees (usually around 3% per transaction). Personally, I have a Lloyds Bank Premier Avios Rewards card that I pay an annual fee for. It gives me two cards (an American Express and a Mastercard), both linked to the same account. This is great because I collect more points by using my American Express. And if I find a merchant who won’t accept it (which often happens), then I can use my Mastercard.
My transactions are fee free and I also get a rewards voucher for an Avios upgrade voucher and another for an Avios companion voucher when I spend a certain amount on my card annually. As mentioned, there is an annual fee associated with this credit card.
Note: The Avios programme has recently closed in the U.K. and your Avios points now sit with British Airways. Avios still work with Lloyds customers with this account to honour and fulfil the mentioned vouchers. Lloyds is currently in the process of changing the benefits included with this credit card and I believe that the American Express card will no longer be offered. I also believe they are removing the annual fee. For up to date and accurate information about this product, phone Lloyds for further details.
Lloyds is not the only travel credit card provider in the market. There are lots available, all with their own unique benefits. So, shop around to find the one that’s best for you. Comparison sites such as Confused and GoCompare are great places to start your research.
Travel debit cards
Travel debit cards are similar to a travel credit card, but with your own funds. For those of you who subscribe to my newsletter, you’ll see that I was recently raving about Revolut. It’s a digital banking alternative that includes a pre-paid debit card (Mastercard or Visa), currency exchange, peer-to-peer payments and more. It takes seconds to apply for online and transferring funds from your bank account to Revolut is easy peasy.
The best thing about this product is the fee-free ATM withdrawals (there is a limit on how much you can withdrawal per month before fees are applied). And, you also benefit from on the spot FX rates. It’s a no brainer.
Spend your coins before leaving the currency zone
You can’t exchange these when you are back home, so you may as well spend them! Or better still, donate them to someone who might need them more than you do.
Should you pay in local currency vs. your home currency?
You are often asked this question on the PDQ or by the shop assistants and waiters. As a general rule, always pay in local currency. Otherwise, the local merchant is doing the conversation and their rates are terrible.
Money Savings Expert has a great article on travel credit cards and debit cards. You can check it out here.
Never get your FX from an airport
As the last port of call before you jump on the plane, they know they have you at their mercy, so often offer terrible rates.
Will I get a better rate on cash when I arrive at my destination?
Generally speaking, no. Although you might get lucky and find a great rate. That said, who wants to trapes around looking for FX when they’re on holiday? Save yourself the hassle and go prepared and get your FX before you travel. We like to get ours from Ace FX as they offer good spot rates for main currencies (EUR/$). Although, so do most places nowadays, so make sure you shop around. Some places, like the Post Office, even offer free delivery (on orders over £500) or click and collect.
If you’re going to smaller countries, sometimes you can benefit from taking USD and changing it into local there as they like having USD and are prepared to pay a good price for it.
Plan your currency exchange in advance to give yourself plenty of time to research the best deals out there to suit your needs.
Until next time, safe travels.
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**As stated, I am not a financial planner. This post is written from my personal point of view. You should seek professional advice about financial products and services before deciding if they’re right for you.
***I endeavour to always credit the correct original source of every image I use. If you think a credit may be incorrect, please contact me at firstname.lastname@example.org.