Weak pound: how to get the best exchange rate for your holiday
For anyone heading off on their annual foreign holiday, Boris Johnson’s arrival in Downing Street couldn’t have come at a worse time. His repeated threats that he will take Britain out of the EU without a deal sent the pound plunging further this week. It leaves holidaymakers, who were already feeling the currency heat, facing their most expensive holiday in years.
As the pound’s official exchange rate fell below €1.09 for the first time in 12 months on Tuesday – it has only fallen lower than that once in the last five years – customers walking up to Travelex desks at London airports were being given just €0.91 for each £1. If they wanted dollars, the rate had collapsed to just $1.01.
Back in March, when many will have booked their holiday, a pound got you $1.33 or €1.17, so they have seen a near 7% increase in costs – before they have even got to the airport. So what, if anything, can you do about it?
Get the best rate you can
Transfer your pounds at the most favourable rates, and you’ll get 10% more euros, or other currencies, than you would if you just walk up to the booth at the airport or ferry terminal. A host of currency suppliers will deliver your order to your home or office, or let you pick it up from the local supermarket.
MoneySavingExpert’s travel money website should be the first port of call, as it will tell you who’s doing the best currency deals, in real time. The very best rates are invariably to be had from a host of bureau de change based in central London. You simply pre-order on the firm’s website, print a voucher, and turn up perhaps an hour or two later. This week several London offices of ICE were offering more than €1.084 per pound.
If you are outside London, do not despair: the Post Office, Sainsbury’s and Tesco were offering €1.071 on Thursday – with Tesco a fraction of a cent higher than the others. To get these rates, you again have to pre-order – using the store’s website. The Post Office says buyers can pick up their euros and dollars two hours after the web order is made. Tesco will let you collect those same currencies in four hours.
What about using the local ATM?
Don’t, unless you have to. The majority of Britons using a debit card at a foreign ATM will be charged a 2.75% or 2.99% non-sterling transaction fee.
On top of that there is often a separate ATM fee, which is sometimes expressed as a percentage of the amount taken out – typically a £1.50 flat fee or a 1.5%-2%. It means some banks charge their standard current account holders £9.50 for a £200 withdrawal from an overseas ATM.
Is there an alternative?
The Halifax Clarity credit card has no overseas fees when you use it to buy things in shops or use cash machines. ATM withdrawals incur interest, even if you pay off the card in full each month – but the charges will be negligible.
The quicker and easier option is a prepaid travel money card. There are no credit checks – and once you have loaded them up from your UK bank account at a typical currency conversion fee of 1%-2%, they can be used abroad, just like any other bank card – but (mostly) without hefty charges.