For many people a holiday abroad is something to look forward to and work towards throughout the year. However, with the current cost of living crisis, recent increases in inflation and everyday items costing more, it’s clear that if you are planning to get away you want to make sure you’re spending your money wisely.

So, what are your money options when travelling abroad?

Most convenient

When planning a trip abroad, it’s important to think about how you’ll budget for your expenses. Will you use cash, prepaid currency or travel cards, or a debit or credit card? Each has its own advantages and disadvantages.

Cash is the most convenient way to pay for small purchases while travelling. It’s also easy to get local currency when you need it. However, carrying large amounts of cash can be risky. If it’s lost or stolen, you may have difficulty getting more money. It’s probably a good idea not to take more cash than you need for things like taxis or tipping and always be aware of carrying cash in easy to reach pockets – make sure it’s carried safely and discreetly.

Convenient and safe

Prepaid currency or travel cards are the modern version of travellers’ cheques – and arguably the safest way to carry money abroad, as you’ll have access to your money without having to carry lots of cash around with you. With a pre-paid card, you can load the exact amount of money you want to take away with you. These types of cards often allow you to spend and withdraw cash without being charged interest or fees¹. Additionally, you may have the additional security of being able to freeze or stop your card should it be lost or stolen¹, although you should check this with the issuer.

Debit and credit cards can also be a convenient and safe way to pay for expenses while travelling. You can use them to withdraw cash from ATMs or to make purchases, but you should be aware of any additional charges that may be applied for things like cash withdrawals. If you do plan to take a credit card abroad, it’s probably worth seeking out ones that offer 0% interest for a period of time (you should check if the 0% also applies to cash withdrawals if planning to use it that way), or one with reduced or no transaction fees.

One top tip when using a card to settle bills when abroad; you will normally be asked if you would like to pay in local currency or pounds sterling – you should always choose local currency. This is because if you don’t, a retailer can then apply what is called a ‘dynamic currency conversion’, which is likely to have a higher exchange rate than your card issuer and so the cost to you will be more¹.

Here are some top tips to help you make the most of your travel money:

1. When using your credit card for foreign transactions or cash withdrawals, make sure you know what you will be charged in fees and/or interest charges. The convenience and the security of a credit card is useful but understanding what it will cost you is important.

2. Shop around for the best exchange rates before you travel. Don’t buy currency at the airport as you will generally get a poorer rate.

3. Consider using a specialist travel money card which can be pre-loaded with foreign currency at potentially better rates than you would get from a bank.

4. Be aware of any cash withdrawal fees that may be charged by your bank.

5. When making purchases in a foreign currency, pay in the local currency rather than sterling to avoid being hit with a ‘dynamic currency conversion’ fee.

6. Check if your travel insurance policy covers you for any loss or theft of cash whilst abroad.

Following these simple tips will help you to make the most of your travel money and avoid being stung by hidden charges.

Sources:

[1] 11/01/23 | The Best Ways to Take Money Abroad | Moneytothemasses.com

Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content was accurate at the time of writing. Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation, and legislation after the time of publication may impact on the accuracy of the article.

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