On a day-to-day basis, most people won’t be overly concerned with the value of their country’s currency compared to that of somewhere else in the world. Political and economic conditions out of our control cause financial markets to react, with investors taking advantage of these fluctuations through forex trading.
But when it comes to going on holiday, soon-to-be tourists pay much more attention to global currency trends. Over the past 12 months or so, a strong US dollar and UK pound has enabled vacationers to get more bang for their buck when visiting countries or regions with weaker economies and currencies, such as Europe.
However, regardless of the economic conditions that develop throughout the course of 2016, there several ways you can make the most of your holiday currency as a matter of course.
Shop around for the best exchange rate
Don’t automatically assume that your bank will offer you the best exchange rate, as this isn’t always the case. In fact, online providers often have superior rates to places on the high street as well as some great deals on commission too.
When shopping around, make sure your choices have the currency you need in stock. While most banks and bureaus will have enough dollars or euros to exchange immediately, they may need to order in rarer currencies.
Buy before you fly
With so much to plan and prepare for, it is easy to forget about buying currency before you fly. But while you’re away from home, not only are ATM charges usually extortionate, things like bureaux de change and hotel concierges abroad offer poor exchange rates, charge high commission and even have hidden fees.
You should also avoid changing currency at the airport. Although you will usually have a few kiosks to choose from, the exchange rates won’t go in your favour.
Apply for a travel-specific debit or credit card
Despite the fact withdrawing cash with a debit or credit card can cost an awful lot of money, there are some options available that don’t charge for this privilege. Take Halifax Online Clarity for example, which doesn’t charge loading fees either.
However, be aware that most of these travel-specific debit and credit cards will still charge immediate interest as soon as you withdraw cash.
Ignore dynamic currency conversion
When you do decide to use your debit or credit card for a transaction, you will often be asked whether you would like to pay in your country’s currency or the local currency. This is known as dynamic currency conversion.
The exchange rate provided by the ATM or retailer is usually much worse than the one you’d receive from your card company. So, always choose to pay in the local currency.
Tell your bank when you’re going
Before you go, let your bank or credit card provider know that you will be going on holiday and how long for. If they see a transaction from abroad on your account, they may think its fraud and immediately block access.
You will then need to call them up in order to explain or use another payment method, both of which could cost valuable holiday spending money.