Getting prepared for your European holiday is bound to be incredibly exciting, but with so much to think about, it can be easy to forget about travel money until the very last minute.
This can mean you miss out on the best deals and get worse value for your money. Phillip Garlick, Head of Commercial from travel money experts H&T shares his top five travel money tips for visiting Europe.
Assess foreign exchange rates before your trip
When you’re preparing for your trip to Europe, it’s important that you plan ahead for changing exchange rate values.
Currency rates are not always predictable and with Brexit negotiations still up in the air, British currency is expected to stay volatile for months to come regardless of whether a deal is reached.
If you’re travelling to Europe this year, Brexit will be a major determinant of the value of the pound and will significantly impact foreign exchange rates.
These rates are typically decided depending on the health of the relationship between two trading countries, which in the current case of the UK and EU is suffering.
When a country has a low inflation rate, their currency will rise in value, but as the GBP is currently under pressure from higher levels of inflation, its value has depreciated against the euro.
This means that those looking to buy travel money this year won’t get the same value for money as they might have done before the EU referendum.
Inflation, interest rates and exchange rates are all closely linked and a change to one can have a knock-on effect on the others. So, it’s important to monitor all of these to figure out what the pound to euro rates will be around the time of your trip.
Think logically about the best time to buy euros
As previously mentioned, the pound is experiencing some turbulence to its value so, it’s understandable for people to be confused about when to buy their travel money.
While some people may feel rushed to buy now in case the rates worsen throughout Brexit negotiations, this might not be best — but it all depends on currency trends.
I recommend monitoring travel money rates for around a month before your trip so you can see what is going on. If the rate is dropping steadily, buying sooner rather than later will be best in case a drastic drop happens right before your trip.
Alternatively, if you spot the rates gradually rising, it might be worth waiting until nearer your holiday to buy. If these trends are fluctuating and causing you confusion, buying half of your travel money now and half later can ensure you get at least part of your money at a better rate.
Buy online for the best deals
Once you’ve figured out when the best time to buy is, you need to think about where you’ll buy your euros to ensure your money goes further.
Thanks to the competitive foreign-exchange rates that the internet can offer, buying your euros online can save you waiting in long lines at the post office and ensure you make the most of your holiday money.
Despite many safeguards being put into place for money exchanges online, it’s still important to look into the legitimacy of these websites before inputting any of your card details.
Consider what method you’ll buy your euros with
Both cash and card are accepted as payment by foreign-exchange providers.
But, while cash and debit card purchases won’t incur any additional fees, things can get a little pricier if you decide to use a credit card.
When you buy your euros on credit card, it’s likely that you’ll be charged interest despite paying off the total amount in full. This is because buying foreign currency is treated as a cash advance fee, similar to withdrawing cash from an ATM.
These costs can differ depending on your credit card issuer or the travel money provider you use.
Due to this, credit cards should only be used as a last resort, especially as there could be additional charges for using one when you exchange currency.
Understand relevant currency terms
There are plenty of places to buy your travel money from but, if you’re not a financial expert, it can be difficult to understand the jargon being used around you.
To make sure you’re in the loop, here are some key terms you’ll need to know:
- Floating exchange rates — Many countries benefit from having floating exchange rates. These are fluctuating rates that are based on the supply and demand compared to other currencies. In contrast, a fixed exchange rate is set or influenced heavily by government input.
- Spot rate — This is the rate that large banks or institutions get when trading large amounts of foreign currency. But, be aware that when you are buying much smaller amounts of travel money you won’t benefit from these lower prices.
- Sell rate — This is the rate that you will be sold your euros at. This will fluctuate between travel money retailers and so it’s important that you scope out a range of these before committing, to find the best deals.
- Commission — When you exchange currencies you will be charged a fee. This can either be an additional cost or be included in the initial price of the exchange transaction.
- Buy-back — If you return with cash to exchange back to GBP, many foreign-exchange providers will accept these on a guaranteed rate, so you know what to expect to get back. However, some will just have a buy rate which is flexible.
With the current economic climate in a fragile state, it’s not unusual for people to be panicking about buying euros. But, with my top tips, you can get the most for your money and enjoy your European holiday like you’re supposed to.
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