While the school summer holidays have only just ended, many families are already considering booking a winter sun holiday now that temperatures have started to drop. Alternatively, if you don’t have school-aged children, then you may be looking to get away sometime soon to take advantage of the lower term-time prices. Whether you’re planning to go away within the next month or before the end of the year, it’s important to consider your foreign currency well in advance due to current exchange rate trends and concerns.
The pound has dramatically weakened against popular currencies such as the US dollar and the Euro since the financial crash in 2008, and this has been made worse more recently by Brexit and the uncertainty surrounding Britain’s future on the world stage. For Americans and certain European citizens, this means that a holiday to the UK is cheaper than it used to be, so we may see a rise in tourism as more people take advantage of this. For UK citizens wanting to take a holiday abroad, however, getting the most for your money is now a little more difficult.
Good deals on currency exchange still exist for Brits heading off on holiday, but to take advantage you’ll need to understand a few important points – read on to find out how to maximise your foreign currency potential during these trying economic times.
DO: Keep an eye on the news
The amount of foreign currency you’ll get for your money depends mainly on the exchange rate between the pound and your currency of choice. Exchange rates alter all the time as they’re part of the stock market. Various factors work together to dictate the price of currency, and while this is entirely out of our hands as consumers, there are clear patterns which should be noted.
When the stability of a country as a whole - and their economic health in particular – becomes or appears weakened, the value of their currency will drop in relation to other currencies. Unfortunately, the Brexit vote came as a bit of a shock economically speaking, and the pound has been floundering ever since. To ensure you can get the best price possible when purchasing foreign currency, it’s always good to take advantage of positive news events, such as a strong speech from the Prime Minister, favourable economic reports, and any deals or progress made as part of Brexit discussions, for example. When things like these happen, the pound tends to strengthen, if only temporarily, providing you with a window in which to get a better deal.
DO: Understand the current exchange rate
Keep an eye on the exchange rate for a few days to get an idea of what would be deemed a good rate. Looking at historical data showing how strong the pound used to be does make it seem like a good deal is impossible. However, when looking at foreign currency and other stocks, it’s important to understand what a good price is right now. You may be waiting for an awfully long time for the best historical prices to return!
Many websites provide easy-to-use graphs which cover the past 24hrs, the past 3 days and the past week. These tools can be used to your advantage by giving you a good idea of the current trends and what is affecting them, thus allowing you to time your purchase accordingly.
DO: Be aware of fees and extra charges
While companies offering foreign currency exchange rates can often advertise no commission and best guaranteed rates, these messages can mean little when you inspect the small print. Shop around before making any decisions, as you may find you can get much more for your money elsewhere, particularly if you’re exchanging a larger amount. Of course, 0% commission is preferable, but only when the exchange rates offered are also reasonable. By keeping an eye on the exchange rates in the run up to purchasing your travel cash, you can protect yourself from being caught out by higher-than-usual rates, sneaky extra fees and hidden charges.
DON’T: Rely on debit cards
When you’re on holiday in a foreign country, it’s usually wise to have a mix of cash and other travel money sources at your disposal. Taking all of your spending money in cash form can be a recipe for disaster if you fall victim to theft or if your luggage is lost. On the other hand, relying solely on plastic can mean you’re not getting the best deal for your money, and you could end up spending far more than you intended.
It’s always best to use a credit card (be sure about the rules surrounding spending abroad, as they can change depending on the type of credit card you have) rather than a debit card for overseas spending on plastic. As long as you keep an eye on what you are spending and you are sure of the fees you’ll be charged by your bank for spending abroad, using a credit card can be a safe addition to taking cash. Many banks will charge you a certain amount every time you spend on your debit card in a foreign country and this can really add up, so avoid this if you can.
DON’T: Get your foreign currency at the airport
It’s a well-known fact that airport bureaux de change rates can be eye-watering compared to what you can find online and on the high street. These airport currency dealers have to carry a large amount of cash in many different currencies to meet demand, and the high rates are partly due to their increased security costs, and partly down to being the last port of call for many to be able to get the currency they need. If you don’t have to wait until the airport to obtain your currency, it’s always better to avoid it. Always shop around for a better deal beforehand to get the most from your money.
DON’T: Assume prices are non-negotiable
While you won’t be given to opportunity to barter on price if you are only getting a modest amount, some travel money suppliers are happy to negotiate a better deal on larger exchanges. You may only save half a percent or so, but this can really add up in the grand scheme of things. It’s always worth asking your currency provider for their very best deal, as sometimes there may be scope to get more for your money.
H&T Pawnbrokers provides travel currency services both online and on the high street via our 247 UK stores. With 0% commission and a guaranteed currency buy-back scheme, you’ll be well looked after both before and after your trip.