Determined to escape the weather and take respite from the credit crunch, UK travellers are still planning short Easter vacations despite the current economic downturn.
Destinations such as Turkey, Egypt and even the USA have become target locations for British holidaymakers who are looking to avoid eurozone countries as the pound hovers around the €1 mark.
When it comes to organising and purchasing travel money, there seems to be numerous options, each with their own set of the advantages and drawbacks. Navigating the best use of each option can make a huge difference to the overall cost of the holiday.
Here’s a summary of the pros and cons of each option:
Credit and Debit Cards
Pros:
This is the only option that requires no preplanning and is the most convenient and hassle free method of shopping abroad. For expensive purchases, £100 or more, using a credit card is the safest option as your purchase will be protected against faults by the Consumer Credit Act.
Cons:
Most bank and card companies typically charge two types of fees for the use of plastic abroad. Firstly a loading fee, this is similar to a currency conversion fee, typically at 2.75% and a second charge is added for the transaction itself.
Using a credit card to make a withdrawal from an ATM should be avoided, as it is the most expensive option for obtaining cash, and interest will be charged from the date of withdrawal. Poorer exchange rates than bureaus also mean you actually pay more for the goods.
Another risk is the card skimming scams which are prevalent in Europe and North Africa. You also need to remember to pay your card off as soon as you get back or you risk costly APR % charges.
Prepaid Currency Cards
Pros:
The prepaid cards combines the safety of travellers cheques with the convenience of a bank card, these cards allow you to preload currency onto them at a fixed exchange rate, so if the pound devalues while you’re travelling you won’t be affected.
Cons:
Only available in Euro and US$ currencies, the market in prepaid cards is relatively new and there are discrepancies between vendors. Watch out for: card issuing charges, preloading, reloading and card replacement fees, expiry dates and transactions levies which can be either fixed per use or as percentage of the transaction.
For those on a tight budget, the prepaid card might end up being an expensive option despite its low risk and high convenience appeal. But it’s important to always check the small print.
Cash
Pros:
Cash is an essential item on your holiday check list because it’s always handy to have a bit of local currency when you arrive. Even for an all inclusive holiday package it’s worthwhile having a bit of spending money for drinks, excursions and gifts. Using cash avoids surplus charges incurred by credit, debit, and prepaid cards.
Shopping around to find the best deal on your local high street is by far the best option when it comes to buying foreign currency. This can be done by comparing exchange rates, commission charges and the option of a buy-back service.
Cons:
If lost, cash can not be replaced, and getting the best exchange rate requires a preholiday shopping around to find the cheapest and most convenient deal before you get to the airport. Check that your holiday insurance protects against loss or stolen cash.
Navigating the best combination
Managing Director of No1 Currency, Mark McElney navigates the minefield of options available when it comes to choosing how to pay for your travel money:
“When it comes to spending money on holiday I would advise people to avoid using their banks cards as much as possible. Credit cards are ideal for large purchases to protect against product faults; however for everyday spending using bank cards should be avoided.”
“Prepaid cards can also be useful for larger purchases and you are already protected against currency fluctuations but beware of transaction levies and reloading fees, the prepaid card can be expensive so always check the small print. For those people who are avoiding eurozone countries this year, prepaid cards are, of course, not an option.”
“For everyday purchases on holiday, taking cash before you go will not only save time and hassle when you get there but it will actually save you money in the long run. These days every hotel, apartment and villa has a security box to keep your money and passports safe, so the risk of carrying cash is greatly reduced.”
“To ensure the best rate of exchange it’s important to shop around to find the best deal before you get to the airport. A foreign currency specialist tends to offer significantly better rates than banks, tour operators and airport bureaux which all helps to save you money.”
“At No1 Currency we pride ourselves on not only offering the best exchange rates but with nearly 300 outlets nationwide we can be found on nearly every high street in the UK, making No1 Currency the most convenient choice, offering the best rates every time.”
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