Travel Money

There are many different ways of changing your sterling into different currency's. The purpose of this page is to discuss the different options available to us as consumers. Looking into the positives and negatives of each potential option.

We hope that you find our content to be informative and that you will tell your friends about our site! 

Really there are 3 or 4 main options available to holiday makers when travelling to purchase their foreign currency these are as follows:

- Bureau de Change - High street banks, airports, Post Office, M&S, Travelex, International Currency Exchange.

- Credit Cards/Debit Cards - Using your creidt or debit cards to withdraw cash whilst abroad.

- Prepaid debit cards - A recent addition you can now purchase cards that enable you to top-up and spend abroad.

- Travellers cheques - Require identification to change, therefore a secure method.

There are increasing numbers of providers who offer this service, and it is becoming an extremely competitive market. The high street banks generally have a bureau desk, as do the post office and more recently Marks & Spencer have entered into the market.

So how does it work? The provider will buy funds fromt the market and generally with price on a daily basis. They will charge a premium over the purchase price of the funds which will then generate the rate at which they will exchange for example Euro's. In addition some providers will charge a commission per transaction.

According to Which? money editor Martyn Hocking who recently made the following statement: "Don't just presume that high-street providers such as travel agents and the Post Office offer the best deals, Thinking ahead and changing your money before you travel means you'll avoid getting stung at the airport – head to a city centre bureau de change or go online for the best deals."

We recently did some research and found that the online offering provided a significant saving from the Post Office and suprisingly the high street banks. For example please find some rates included below, the prices are based on 400 Euro's on 23rd July 2009:

Online Providers:

• Best Exchange - £443.60 Exchange rate of 1.140
• International Currency Exchange - £444 Exchange rate of 1.126
• Post Office Online - £453.19 Exchange rate of 1.116
• Marks & Spencer - £462.41 Exchange rate of 1.093
• Natwest - £463.84 Exchange rate of 1.090

I have included the cost of delivery as well, and for International Currency Exchange they offer free delivery over £400!

As these results highlight it can cost you up to £20 more for exactly the same transaction if you were to use your "trusted" high street bank. This clearly suggests that it is worth shopping around, and for me it was surprising that the rates which Marks & Spencer offered were right at the lower end of the scale. Please consider that these are the online rates and branch rates are very likely to be even worse. So it is definitely worth shopping around for travel money.

In addition you need to consider the following: If your primary bank is Lloyds TSB, Abbey, Barclays, Co-op it is recommended that you do not use your Visa debit card when purchasing. You will normally be charged a "handling fee" for foreign currency purchase of up to 2% (on top of any other commissions and charges) even though you have not left the UK. Therefore it is recommended to either use an alternative card, or withdraw the money out of a nearby ATM first and pay in cash. These charges do not apply to all Visa debit cards. If you have a Visa debit card with Halifax, HSBC, Nationwide and RBS/NatWest you will not be charged this fee. Note that all credit cards charge a fee of 2.5% when used to buy foreign currency.

There are two broad types of credit/debit cards for travel money, those which are pre-paid i.e. You would top the card up before you go away and your general bank debit or credit cards.

The bank debit and credit cards offer a variety of different charges depending on the type of account that you have and also the type of transaction being conducted. For example if you buy goods in the Eurozone this may be cheaper than taking out cash from a cash machine and then purchasing the same goods. If you are considering using your debit or credit card it is extremely important to understand both the exchange rate that you are being offered for transactions (as demonstrated above in the online Bureau de Change transactions this can make a big difference) and also any charges that you may incurr.

There some extremely good offers in the market for various credit cards that have some fantastic rates. However it is worth remembering that unless you clear the outstanding balance you will be liable for the interest, which can significantly increase the cost of the currency transaction itself.

- The Best Deals Credit Cards

• Santander Zero - Worldwide 0% Load on Exchange rates & ATM Withdrawals. However it does charge 27.9% for cash withdrawals.
• Post Office - Worldwide 0% Load on Exchange rates - However a 2.5% fee on cash machine withdrawals soon increases the price!

The Best Deals Debit Cards

• Nationwide Flexaccount Visa Debit Card - 0% Load fee in Europe, however for international destinations they charge 0.84% Worldwide.

Pre-paid cards -This is a recent introduction to the market and has gone someway to provide a viable alternative to travellers cheques. You load cash onto a card and then it can be used like a debit or credit card. If for example the card were to be stolen, then they would only be able to withdraw the maximum of the amount that is outstanding on the card, rather than clearing the whole bank account. In addition these services are now being used by many families who's children are going on holiday or travelling, as this means that the funds will be credited directly to the account. It is a convenient way of completing foreign currency transactions and it has the added security of a pin number to ensure that your transactions are protected.

In addition if you lose your cards some providers will replace it with the cash amount still included on it! Therefore this has significant advantages over carrying cash!

There are a variety of charging structures and normally most providers will charge an upfront fee for the service with most providers charging a monthly fee. In addition there are boundary's around how much money that you can transact per transaction and per month. We have just found that the Sun newspaper has launched a pre-paid card with a 0% fee per transaction for foreign currency, however they do still charge 2.75% per transaction. International Currency Exchange offer a similar deal, but again it is important to shop around and fully understand the charging structure.

There are many review sites that offer further information on the various products available.

Travellers cheques have been around for an extremely long time. However in recent years less and less accepted by foreign retailers.

In principal a travellers cheque is an interest free loan that is provided to the traveller, provided by American Express. You will purchase the required number of cheques prior to departure and then sign each of them (this provides some security), and then when you reach your destination you can change them into the relevant local currency. Typically the charges for travellers cheques have been relatively low, with 1% being the normal transaction cost.

An additional level of security with travellers cheques is that you have to present identification to cash them in. Obviously this ensures that if they are stolen they are not easily cashed. If you do lose your cheques you can also arrange replacements very easily.

As mentioned the serious disadvantage to travellers cheques in the modern age is that many retailers will no longer accept them, preferring instead to opt for debit and credit cards.