Martin Lewis: Holidaymakers are on to a winner as the euro struggles against pound

Flying for sunnier climes
Flying for sunnier climes
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It’s the question on every thrifty holiday making Brit’s lips, or certainly those who tweet or contact me anyway, “The pounds been bouncing around the €1.40 mark, should I be buying Euros right now?” This is a huge rate compared to this time last year when it was €1.20, or two years ago when it was €1.15.

The issue isn’t one of a strong pound, it’s more a weak Euro – on the back of increasing worries about deflation and lower interest rates in the Eurozone. The pound against the dollar is now at $1.50, when last year it was far better for holidaying at $1.70.

Yet the weak euro is a boon for British holiday makers going to the Eurozone (Spain, France, Greece and the rest, but of course not Turkey), directly reducing the cost of fuel, eating out, day trips and more once there and indirectly reducing the cost of hotels, car hire and more. Here’s 5 need-to-knows…

Should I be scooping up euros now? Let me be blunt. I don’t know. Nor does anyone else. Currencies move – it could get better or worse, or stay the same. Even professional currency speculators don’t always get it right. Many commentators were saying to buy a few weeks ago when the euro was at €1.38, but it’s gone up then down since – and had you listened, you’d have lost out compared to the best price.

So take a step back from the daily market movements and think about your own circumstances. The euro rate for people in the UK right now is very good compared to the past few years, and would certainly mean your holiday spending will go much further than in recent years.

So it is a legitimate decision to say, “I want to bag the certainty of a high rate now, as that’ll be decent for my holiday”. If you do, then do it with the mind-set that you won’t worry if the euro gets even weaker, you’re happy with the price you’re getting. This is all about whether the upside of ‘certainty’ outweighs the risk that you’ll look back with hindsight and say, “I should’ve waited.” Of course if the euro rate drops and you’ve locked in, you’re on a winner.

The very cheapest way to spend abroad. My personal solution is to ignore market movements and just get the best rate each time you go. By far the top deals come via spending on a specialist overseas credit card - providing it’s repaid IN FULL each month, to avoid interest. Then in every country you get the same near perfect exchange rate banks do (normal debit and credit cards add a 3% fee onto this rate) smashing bureaux de change deals.

To get a card, you need to pass a credit check, my www.mse.me/overseaseligibility calculator shows which top players you’re most likely to get, and unlike applying, it does not impact your credit file.

The top pick is www.halifax.co.uk Clarity as it has the lowest ATM charges, yet www.saga.co.uk (over-50s), www.postoffice.co.uk, www.aquacard.co.uk (poor credit scorers) and www.nationwide.co.uk Select card (for its customers ONLY) are all up there too. If you fail to fully repay, the rates are 12.9%, 11.9%, 17.8%, 34.9% & 15.9% rep APR. For pros, cons and how best to use it read my www.mse.me/travelcards guide.

Going soon, or want to lock in a euro rate? If you can’t get one of the cards above, are going imminently, want cash, or want to lock in the latest cheap euro rate, there are two easy ways to do it.

a) Top prepaid cards. Here, you load the card with cash before you travel, then use it like a debit card. If you lose it, your cash is protected. Unlike top credit cards, you get the rate on the day you load/buy, not spend, so if the pound gets you even more euros afterwards, you lose. If it gets you fewer, you win.

My top pick for euros is www.ukash.com as it has a good rate and low fees. Full info in www.mse.me/prepaidcards

b) Top euro cash rate. My www.travelmoneymax.com scans rates on 40 top online bureaux de change.

Not booked yet? Slash flight costs. For scheduled flights, don’t wait till the last minute as flight costs soar.

- Cheapest price on normal flights: Use flight comparisons www.kayak.co.uk (for flexibility and speed), www.skyscanner.net (for cheapest time to go), www.travelsupermarket.com (for breadth).

- Check cheap charter flights comparisons too: Flying to a traditional package holiday destination, eg, Majorca? Check for spare capacity being sold on tour operators’ flights via www.travelsupermarket.com, www.avro.co.uk and www.flightsdirect.com.

- Find the perfect time to book: Use the Flight Insight tab on comparison site www.momondo.co.uk, eg, on average at least 53 days ahead keeps your price down but it varies by destination, so worth a check.

- School hols flight trick. Easyjet’s Flexifares let you switch dates a few weeks without paying more. So bag cheaper term-time flights, then swap for your chosen school holiday dates. Full how to and warnings in www.mse.me/easyjet.

Slash hotel costs. As European hotels costs are in Euros, relatively they should be getting cheaper, though of course it depends on how quickly the rate factors through to you.

When booking forget the star system. There’s no world standard and it’s often about facilities, not quality. To find the hotel you want to stay at read reviews on www.tripadvisor.co.uk but always ignore the best and worst 10%, Then…

a) Check www.trivago.co.uk and www.travelsupermarket.com comparisons to find same room for less.

b) www.lastminute.com sells secret hotels at big discounts, but you only know the star, description and rough location. However you can turn detective by cutting and pasting part of their description into a search engine, which often reveals where it really is – for a more thorough system to doing this see my www.mse.me/secrethotels guide.

c) If you’re going as a family or with friends, cheap villas can massively undercut similar quality hotels. Eg, a 4-bed Algarve villa is £400/wk compared to £800 in a similar quality hotel. Plus as you usually will pay in euros, you get a direct benefit of the weak euro – making them far cheaper this year.

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