Get the most bang for your buck, Euro, or rand! Our guest financial expert Claire Connachan shares 10 of her most valuable industry secrets on how you can get the best exchange rates on your travel money.
1. Know the jargon
Foreign exchange has its very own jargon. Learn the lingo so you don’t get led up the garden path when purchasing your dosh. For example:
- sell rate: what you get when you exchange pounds
- buy rate: what you get when you exchange leftover foreign currency
- interbank or bank to bank rate: the wholesale rate that banks exchange between themselves
More: learn more examples of foreign exchange jargon and become an FX (foreign exchange) whizz.
2. Investigate your currency
This doesn’t apply to the US Dollar or Euro, but some more exotic currencies have odd quirks. For example, the Moroccan Dirham cannot be exchanged internationally, and Cuba has two currencies – one for tourists and one for locals! Be sure to investigate the money you need before you exchange. So do your homework, otherwise you might be stuck!
3. Watch the exchange rates
Watch the daily “interbank” rates on your chosen currency so you know what makes a good exchange rate. Currency fluctuates constantly, so the price you get will never be the same from day to day. Many things cause travel money to wobble, from employment figures to economic forecasts to interest rates, so watch currency movements and buy when the rate is climbing.
4. Shop around
Currency rates not only fluctuate from day to day, but also from provider to provider. Prices are not the same across the board so it’s extremely important to shop around for exchange rates before you purchase. Rather than traipsing around the high street, phone and ask for rates or use the excellent MoneySavingExpert Travel Money Max comparison site.
5. Negotiate discount deals
Exchange rates are not set in stone and it’s possible to negotiate a discount with specialist bureaus, especially if you are exchanging a large sum of cash. As a guide, you can often get an extra 0.5% on the advertised rate if you have a large amount to exchange (it makes a difference!). Much like a price-match scheme, you can also negotiate prices if you see a better rate with another provider, so get bargaining!
6. High street vs online
Be aware that many specialist foreign exchange providers offer much better rates over the internet. If you order cash online to pick-up in-store or deliver through the post, then you tend to get a much better rate than the high street. To check who offers the best online rate, use an comparison site like Travel Money Max.
7. Hidden fees
Although it’s easy to walk into a bureau de change and whip out a credit or debit card to buy travel money it’s a bad thing to do as cards tack on extra fees. Each card provider has a different policy, but fees usually start around £1.50. It’s much better to get your pounds from the hole-in-the-wall and convert the notes to travel money instead.
8. Travellers’ cheques
If the thought of carrying large wads of cash abroad gives you the heebie-jeebies, consider travellers’ cheques. Travellers’ cheques can be replaced if they are lost or stolen and are more secure than cash. The most widely accepted around the world is American Express. Travellers’ cheques have limitations; only six currencies are available and they generally need to be cashed in for hard currency overseas.
9. Pre-paid cards
Another alternative to carrying bundles of cash around is a pre-paid card. You load the card with money before you leave the UK then use it as a substitute debit card. Like travellers’ cheques, they have some limitations and you need to read the small-print before you buy. Some have purchase costs or hidden charges, so be wary.
10. Don’t believe the hype
Travel money providers offer things like '0% commission', 'best rates on the high street' or 'guaranteed best rates'. These claims are often misleading and should not be taken at face value. For example, 0% commission sounds great but rates can be poorer as commission is hidden in their exchange rate margin. The best way to get a great exchange rate is to shop around, negotiate on price and know your currency. Don’t be fooled by marketing spiel!
Claire Connachan is an FX expert and has worked at one of the UK's largest independent foreign exchange companies.