How planning can make your travel cash go further

With the pound at a high against the euro, it pays to buy now before uncertainty post-election

The pound’s recent strength against the euro could be hit by economic uncertainty under a new government (AFP/Getty)

Next week’s election could hit your holiday plans. Why? The pound’s recent strength against the euro could be hit by economic uncertainty under a new government. But buy euros now, and you could lock in near record high rates.

In fact one travel expert reckons that you could save a tenner for every £100 you spend abroad by planning ahead. “Plan what you’re going to do and how you’re going to spend overseas,” advises Bob Atkinson of TravelSupermarket.

He says the cheapest way to pay abroad is to use plastic, but not any plastic. “Look for credit and debit cards which are designed for usage overseas. The market-leading deals – such as the Halifax Clarity credit card and Norwich & Peterborough debit card – have no hidden currency loading fees or transaction fees.”

“Compare that to the worst option, which is to rock up at an airport and buy euros without preordering. Do that and you’d end up spending about 10 per cent more at somewhere like Heathrow,” Mr Atkinson says. “That’s effectively like throwing away £10 for every £100 you spend on holiday.”

His view is backed up by Andrew Hagger of Moneycomms.co.uk. “The cost savings make it worth carrying a specialist card along with your passport whenever you travel outside the UK,” he says. Most banks add on a foreign usage fee to credit card cash and purchase transactions, he explains. “It’s around 2.75 per cent to 2.99 per cent, but that’s only half the story, as on top of the usage fee, most credit card cash withdrawals will cost you around an extra 3 per cent, so an ATM withdrawal of £100 currency equivalent can easily set you back a combined charge of around £6.”

Debit cards are no better. “We tend to take our debit cards for granted, particularly because they don’t cost anything to use while in the UK, but it’s not the same when you’re overseas,” he warns.

As with credit cards there is a debit card usage fee of up to 2.99 per cent for cash plus an ATM withdrawal charge of up to a fiver. “However, the charges that catch most people out are those for debit card purchases, which are subject to the usage fee, plus up to an additional £1.50 per transaction regardless of the amount.”

With the election looming next week, foreign exchange experts warn that the strong possibility of a hung parliament will hit sterling. “So if I was travelling to one of the euro destinations this year and had any spare cash, I would be tempted to buy euros now put them aside for later,” says Bob Atkinson. Today’s rate is around 1.40 euros to the pound compared to 1.20 a year ago.

“You can do that in cash and use Moneysavingexpert’s Travel Money Maximiser, an online tool that tells you the best place to get cash all over the UK,” he advises. “But it also highlights the worst places, which is often our high street banks, the Post Office and travel agents.”

But rather having cash at home lying around at home long before you travel, you could lock in the good exchange rates now by taking out a pre-paid card. They are chip and PIN secure, accepted where you see the MasterCard symbol and most offer a far cheaper way to pay than most high street debit and credit cards. The best have no usage charges, no loading fees and no charges when you take money out. With sterling currency cards they can actually just be loaded from your debit card and have the exchange rate locked in at the time the cash is transferred to the card.

“However he difference between the best and worst pre-pay cards is around £7 in every £100 spent so buy wisely using an online comparison site,” Mr Atkinson suggests, highlighting decent deals from the likes of Caxton and FairFX.

Watch a video of Bob Atkinson answering our questions here.