You've saved money on flights and your hotel room - now get the most bang for your buck, Euro, or baht! Our guest financial expert Claire Connachan shares 10 insider tips on how you can get the best exchange rate on your travel money.

1. Know your FX jargon

Foreign exchange has its very own jargon. Learn the lingo so you don’t get led up the garden path when purchasing your holiday money:

  • 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 exchange rate that banks use between themselves

Learn more examples of money exchange jargon here and become a fully-fledged FX whizz.

2. Investigate your currency

The US dollar and Euro exchange rate may be fairly straightforward, but some foreign currencies have odd quirks that you need to watch out for. For example, the Moroccan Dirham cannot be exchanged internationally, and Cuba has two currencies – one for tourists and one for locals! To boot, several countries in Southeast Asia, including Cambodia, use US dollars as a second currency, but your dollars need to be pristine - ie. no rips or folds - to use them in Myanmar. Be sure to investigate what you need before you purchase your travel money.

3. Watch the exchange rates

Watch the daily “interbank” rates on a money converter site like www.xe.com 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, as well as the ongoing uncertainty around Brexit, which continues to have an impact on the pound to Euro exchange rate.

When is the best time to change currency?

Allow plenty of time to watch currency movements; start looking at least one month before your holiday and buy when the rate is climbing and the pound is strongest ie. when you get the most euros, dollars or other currency for your sterling. This also gives you enough time to order your travel money online if this works out cheaper (see point 6, below). It's hard to accurately predict FX but forecasting sites can help judge whether the value of the pound is likely to fall or rise before you go away.

4. Shop around for your holiday money

Currency exchange 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 the best exchange rates before you purchase.

Where is it best to exchange currency?

There's not one foolproof place to get the best rates on foreign currency so don't just rely on the Post Office or your usual provider; phone around and ask for rates or use the excellent MoneySavingExpert Travel Money Max comparison site. Don't wait until you get to the airport, your hotel or foreign banks, as these will usually charge more commission. If you choose to use a credit or debit card for some of your purchases abroad, always ask to pay in local currency to avoid something called a 'dynamic currency conversion rate' which businesses will apply to convert your purchase into sterling.

5. Negotiate discount rates

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. Plan ahead before you travel and order cash online to pick-up in-store or deliver through the post, and 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. We've got more money-saving tips for cutting your holiday spending in this guide.

7. Watch out for credit card 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 not always the best value, as some cards tack on extra fees. Each card provider has a different policy, but fees usually start around £1.50. It can work out cheaper to get your pounds from the hole-in-the-wall with your debit card and convert the notes to travel money instead. On the flip side, if you're intending to use a credit card abroad, some banks and credit companies now offer cards with travel incentives like zero foreign transaction fees and low interest on cash withdrawals abroad. Check out our article on the best credit cards for travel before you go.

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. Prepaid cards

Another alternative to carrying bundles of cash around is a pre-paid card. This can give you a bit more peace of mind, as your travel money will be 'locked' at the exchange rate on the day you bought the card, and it won't fluctuate as you spend, like using debit or credit cards. 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, including purchase costs or hidden charges, so be sure to read the small-print before you buy.

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, check out money converters for current rates and know your currency. Don’t be fooled by marketing spiel!

Calculating currency rates

Claire Connachan is an FX expert and has worked at one of the UK's largest independent foreign exchange companies.

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*Published April 2017. Any prices are lowest estimated prices only at the time of publication and are subject to change and/or availability.

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