Whether looking to transfer currency for a business trip or for leisure, for shopping online or to send money to friends and relatives, finding the way to get the best possible rates has never been more important. The current economic climate means people are more cautious than ever with their hard earned money and it is crucial to understand the differing options available for exchange. Of course, not all of them are useful in all situations, but choosing the right approach for each circumstance will help to make the money go further.
Cash
When travelling, even if cash will not be the main method of payment it can be useful to carry a small amount of local currency for emergencies. This might be needed to hire a taxi for the transfer from the airport, or to purchase small refreshments on arrival into a different climate. The risk with carrying cash is that it can always be lost or stolen, with travel insurance only covering a set amount of cash per person.
The rates of currency exchange are constantly fluctuating. When a holiday is booked, start monitoring the rates to ensure money is exchanged for the best possible price. In addition, be aware of the exchange company’s handling fees and commission rates too. These can be significant if only transferring a small amount of money. Banks and building societies often offer currency exchange to their customers, as do travel agents and bureau de change locations.
Traveller cheques
Though these cheques are not as widely used as a few years ago, they are still a viable option for some travellers. Though they can be more expensive to purchase than a straightforward currency exchange, the benefit is that a cheque is protected and can be recovered if they become lost or are stolen. On the other hand, the commission rates are often high enough to put people off using traveller’s cheques in the fact of other currency options.
Credit card
If the credit card to be used abroad has been selected specifically for this purpose, then ‘paying by plastic’ can be one of the most efficient ways to spend money in a foreign country. Most credit cards charge a substantial fee for use abroad, but there are several options specifically designed for travel use which are more competitive. These might have no usage fees at all, or significantly lower rates which enable the user to spend as they normally would. Of course, it’s important to stay on top of this kind of borrowing just as would be done when at home, but as a means of controlling and protecting spending whilst abroad they can be ideal. Moreover, many of the credit cards marketed towards being used abroad also have periods of 0% interest free credit, allowing for holiday spending to be spread over a longer period of time. When using a credit card abroad, though, it’s important to be aware of the exchange rate offered by the card provider. It’s typically better value to pay in the local currency and allow the card company to make the exchange.