Get the Best Exchange Rate for Your Holiday

This week guest blogger and foreign exchange expert Peter Lavelle shares the scoop on why ATMs aren’t always the best bang for your buck when travelling.

Our previously promised post (a video roundup of our last trip to India) needs a tad more love before release (as I struggle through Video Editing for Dummies).  Never again will I underestimate the time required to turn days of raw footage into five-minute segments. Luckily, Peter is already a pro at what he does and rose to the occasion of helping out:


If you’re reading Follow Ben and Jenna, then chances are you have a hankering to do some serious holidaying. One hurdle though, aside from booking the flights and hotels and remembering to pack your sun cream, is how to get the best exchange rate?


This is important because, even if you’re only changing a few hundred pounds or dollars, a small change in the exchange rate can make a big difference to the foreign currency total you receive. So how do you go about it? In this post, I aim to provide some guidance, as well as a quick look at what the exchange rates might do in the coming months.


Bureau De Change

Bureau De Change (Photo credit: ChodHound)


In short, you can get the most foreign currency for your holiday following these steps:


1. Don’t change currencies, either at the airport bureaux de change or at a hotel.


This is because the owners of these bureaux know you’re buying foreign currency at the last minute before you leave, and so provide the worst exchange rates available. This is a good way to get your holiday off to a bad start.


2. Don’t use your domestic credit or debit card abroad.


This will subject you to a range of fees and penalties, including but not limited to: 1) a charge for withdrawing cash from a cash machine, 2) a charge for using your normal card in a foreign shop or restaurant, and 3) a 3.00% load fee, so that if you pay for $100 of foreign currency for instance, you will be charged $103.


In the UK at least, these fees and penalties apply to virtually every high street bank available, including HSBC, Natwest, Santander, Barclays, Lloyds TSB and so on. It’s therefore highly worthwhile being cautious about using your debit or credit card abroad, except in event of an emergency.


3. Use a holiday money comparison site if you want travel cash.


If you want cash for your holiday, perhaps because you’re going somewhere where withdrawal machines are uncommon and pre-paid cards not accepted, you could do worse than use a comparison site like


With these, you simply enter the currency you want to buy (this one is a UK website, so assumes you’re starting with British pounds), whether you want to pick up the cash or have it delivered, and off you go. It’ll return a list of bureaux de change providing the best exchange rate.


Then, it’s just a matter of going to Google Maps and finding out where your nearest branch is, and collecting your currency. With a comparison site like this, you’re all but guaranteed to find the best cash exchange rate.


Of course, there are precautions to keep in mind if you decide to use a bureaux de change. The first is that obviously cash can be lost, in which case it cannot be replaced. This isn’t the case with pre-paid cards, which I will move onto in a moment.


In addition, most UK debit or credit cards charge you to buy currency at a bureau de change. If you decide to buy cash then, it’s better to withdraw it from a cash machine for free first, and then use that directly at the bureaux de change second. This will save you the needless cost.


4. Get better exchange rates and added security from a pre-paid card.


The alternative to using either cash or your domestic debit card on holiday is to buy a pre-paid card. These, such as those available from Caxton FX and Fair FX, enable you to top up the card with foreign currency before you leave, and then use them like a debit card.


Unlike domestic cards, there are no fees for using those from Caxton FX (which I use personally) and Fair FX. In addition, unlike cash, if you lose it you can get it replaced for £10, with your foreign currency total intact. They also provide better exchange rates than most (if not all) bureaux de change.


In short, so long as you’re travelling somewhere here using plastic is acceptable, I find these are the best option.


Hopefully then that puts you in a good position for you holiday. But what about the exchange rates in the coming months?

Official press conference following the Eurozo...

Official press conference following the Eurozone Heads of State or Government meeting, Brussels, 23 October 2011 (Photo credit: President of the European Council)


5. Foreign exchange rate forecast.


Regardless of where you’re travelling in the next six months, one thing looks certain: the Eurozone debt crisis will roll on, and that in turn will mean subdued global economic activity.


What does that means for the exchange rates? Well, in my opinion (and it is just my opinion) it means appetite for currencies belonging to so-called ‘safe haven’ countries, such as the UK, United States, and Japan, will continue to expand.


These economies are called havens because, compared to the Eurozone, which is obviously tearing itself apart, and countries such as Canada and New Zealand, which fluctuate with the price of commodities, the UK etc. provides a stable and reliable investment.


For me at least then, these currencies look set to climb inside the next six months.


I do hope this post has been useful.

About Peter

Peter Lavelle is an economic commentator at foreign exchange specialist Pure FX. To keep up with changes in the exchange rate, feel free to connect with his Google+ profile for free daily updates. In addition, if you intend to change more than £5,000, get in touch at Pure FX. One of its specialist dealers would be delighted to provide an in-depth response to your query.

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