The Daily Telegraph - Saturday - Money
Beware the holiday money traps as pound’s value dives
When Clarence Michel and his fiancée, Sophia Alves, were diving in the Philippines on a nine-month trip of a lifetime, they did so safe in the knowledge they were saving as they spent. But this summer’s holidaymakers may not be so lucky with the pound’s value collapsing – leaving some paying more than £1 for a single euro.
The world of holiday money can be a minefield, so Telegraph Money asked financial experts for their top travel tips and has attempted to answer some common questions.
Analysis of bureau de change exchange rates carried out by the Travel Money Club, a foreign currency firm, showed that buying your cash in the wrong branch could cost you £70.
The difference between getting £1,000 worth of Thai bhat with Travel Money Club and with Marks & Spencer was £71.50, while the same amount spent on euros would have resulted in a difference of £34.33. The firm’s Karen Gee recommended shopping around using price comparison websites such as travelmoneymax. com, which is connected to moneysavingexpert.com, and compareholidaymoney.com. Almost certainly not. Airports and other transport hubs notoriously offer some of the worst rates around. Ms Gee said: “Airport bureaux de change prey on the desperate and illinformed to pay for some of the most expensive retail space on the planet.”
Cruise ships are another poor-value option. Ms Gee said this was because “they have a captive audience often requiring many different currencies and with very little time to seek out alternatives at each stop-off point”.
How much more it could cost you to exchange £1,000 into euros at different bureax de change
Most high street banks charge a fee when customers withdraw or spend abroad using a debit card. According to Starling, an online-only bank, using its card could save travellers up to £4 when they spend £100.
The same is true of its rivals Monzo and Revolut. All three offer unlimited spending with no fees, but Monzo and Revolut charge for withdrawals of more than £200 a month.
By contrast, the majority of traditional banks levy a fee. The highest fee for withdrawing £100 at an ATM is £4.99 with TSB, while several others charge more than £4.
Mr Michel, 38, used a Starling card while he travelled the world with Ms Alves. The couple mainly travelled in Asia and Central America.
He said: “I didn’t work out how much we saved on transaction fees, but the whole trip cost £30,000, so, if you imagine paying a small percentage every time we used any money, it would have been much more.” This is one of the biggest money mistakes travellers make. When using an ATM or a card machine overseas, holidaymakers will often be asked whether they would like to pay in their own or the local currency. Always pay in local currency, as the exchange rate will be set by your bank. This is almost always better than the ATM provider’s rate – even accounting for fees.