Planning ahead can make your travel money go that bit further

Money transactions involving foreign currency can dent the most careful of holiday budgets. Yet, with some planning, the hidden charges can be reduced or removed.

When calculating a vacation budget, cost in the currency required to cover taxis, tipping, and extras as well as for meals if not going on an all-inclusive basis. Tickets for some activities are cheaper if purchased in advance.

If paying for a holiday or extras like excursions other than in sterling, most credit cards impose a foreign usage loading.

Hide Ad
Hide Ad

This can be up to 2.99 per cent in both the EU and worldwide, with AA, American Express, Asda Money, Leeds-based First Direct, HSBC, Leeds Building Society and M&S Bank.

Instead opt for a card with nil fees in this respect: Aqua, Halifax Clarity and Rewards Clarity (but not applicable to other Halifax cards), Metro Bank, Nationwide Select Visa, Post Office (both Classic and Platinum) and Saga.

However, whilst these cards have no transaction or foreign exchange charges on retail purchases, they do levy fees for cash withdrawals, which is typically 2.5 per cent with a £3 minimum.

There is no charge for any of these eight cards but some providers have minimum annual income requirements, like £5,000 with Nationwide, £8,000 and £15,000 for the two cards with the Post Office and £12,000 with Saga.

Hide Ad
Hide Ad

When using Aqua, Halifax Rewards Clarity and Nationwide Select, there is the added bonus of receiving a cashback, which can be significant, such as three per cent with Aqua.

This applies to goods and services, not for cash with-drawals.

Some credit cards come with a complimentary travel service, such as Amex Nectar, Barclaycard, NatWest, Royal Bank of Scotland and Vanquis.

Others offer savings on travel and/or hotels: Co-op, HSBC, M&S Bank, Royal Bank of Scotland, Saga, Smile (part of the Co-operative Group) and Tesco.

Hide Ad
Hide Ad

Both the charge cards analysed by Moneyfacts – American Express and First Trust Bank – place an EU and global foreign usage of 2.99 and 2.75 per cent.

The average family half-term break cost £128 more than in May last year, a 4.05 per cent increase, according to M&S Bank.

Its research shows that only Egypt beat inflation with a rise of just 0.8 per cent. France is the cheapest holiday destination at £547 per person.

The increase was largely the result of less favourable exchange rates and higher local costs.

Hide Ad
Hide Ad

The Netherlands saw the highest percentage cost increase of 6.1 per cent, now £652 on average per person, showing the effect of the highest inflation rate (2.9 per cent) in the eurozone.

For the popular holiday destination of the US, the bad news is that it is the most expensive venue of those researched owing mostly to the cost of long-haul flights.

A week in Florida now costs £1,218 per person on average.

“As the euro has strengthened against the pound, holidaymakers are starting to look further afield to make their travel money buy that bit extra,” says Paul Stokes, Head of Travel Money at M&S Bank.

Hide Ad
Hide Ad

Ensure some cash in the currency concerned is taken for immediate use as well as for small purchases.

One of the few exceptions is Iceland where even a coffee is usually bought on plastic although coins are required for local buses.

Foreign cash providers often quote different rates online to in-branch.

Their worst deals are at airports and docks as these are regarded as last-minute ‘distressed’ sales.

Hide Ad
Hide Ad

Whilst almost every provider offers commission-free currency, it’s a myth to think that no additional fee will be raised with so-called cut-price deals.

Although such funds often have to be pre-ordered for later collection, a charge is usually levied, even when using a debit card.

Airport and port bureaux de change may also have a limited variety of note denomina- tions.

HSBC offers 67 different currencies with euros and US dollars held in all branches and others – like the Bermudian dollar, Dominican peso, Fiji dollar and Pakistan rupee – available next day, delivered to home or for branch collection.

Hide Ad
Hide Ad

The Post Office has 25 currencies on demand at 1,600 larger offices whilst over 4,000 branches have the US dollar and Turkish lira and 10,000 offer the euro.

Over 70 currencies can be pre-ordered at more than 11,500 post offices or online for next-day branch or home delivery including Costa Rica colon, CFP franc used in French Polynesia, Guatemalan quetzal and Peruvian nuevo sol.

M&S have 122 bureaux in-store with the facility to charge the foreign currency to an M&S credit card without fee.

Thomas Cook offer 83 currencies and have 887 stores with foreign currency.

Hide Ad
Hide Ad

Travellers cheques are still available but little used by comparison with a decade ago. HSBC stopped offering them in April.

A newer way to take currency is on a pre-paid plastic card. There are several providers.

The Post Office offers eight currencies on its Travel Money card, which is the widest range on offer in the high street.

In addition to the euro, US dollar and sterling, it can pre-load the card with Australian, Canadian, New Zealand, South African and Swiss currency.

Just apply at any post office.

Hide Ad
Hide Ad

The Thomas Cook ‘cash passport’ can be preloaded in any of seven currencies.

If short of cash once abroad, arrange for a MoneyGram to be sent.

Available from Co-op Travel and Thomas Cook, it can be in any currency. For £9.99 a transfer, funds – up to £5,000 – can be with someone within 10 minutes.

Taking cash out once abroad can be expensive. Typically there are double charges: withdrawal (often two or more per cent) and an ‘exchange rate adjustment’ (2.75-3 per cent).

Hide Ad
Hide Ad

If using a credit card, there can be a third charge of interest on the cash deducted.

Virgin Money’s credit card makes three deductions for taking cash out abroad: cash machine fee of five per cent (minimum £5), foreign exchange loading of 2.99 per cent and interest at 27.9 per cent.

Avoid making regular small withdrawals as there may be a minimum charge. Watch for a low limit which may be applied locally.

It’s worth asking your bank in the UK for the name of their corresponding bank and your limit in the event larger cash sums are required in an emergency.

Hide Ad
Hide Ad

Some bank accounts bring benefits. Free overseas ATM cash withdrawal transaction fees when using an HSBC ATM is available with HSBC Premier and Advance.

Nationwide FlexPlus current accounts offer commission-free ATM access.

Package accounts from Silver upwards at Bank of Scotland and Lloyds TSB have no fee for buying foreign currency from another provider in the UK, worth up to £4.50 a transaction.

Discounted rates on foreign bank notes and travellers cheques delivered to your home or local branch, worth up to £20, is free with Select and Black accounts at NatWest and RBS.