Don’t get stung by these simple, but costly currency mistakes on your travels
Currency fluctuations, rip-offs and poor decisions mean that British holidaymakers could have lost a shocking £14.3 billion between them this year, according to our own investigation.
So, to ensure you don’t throw away your hard-earned money, here are some simple travel mistakes and rip-offs to avoid.
The currency markets can seem daunting. But by just dipping a toe in – and watching how the pound is doing against the local currency of your chosen destination – you could save a lot of money.
How much you get for your pound is constantly changing and it can be particularly volatile amid uncertainty over Brexit. By buying currency when rates were at their lowest in 2019 compared to when rates were at their highest, the nation would have collectively lost £3.8 billion just by exchanging currency on the ‘wrong’ day.
Top tip: The safest way to guarantee getting a rate you’re happy with is to lock-in the rate on a prepaid card when the pound is doing well. If you’re not decided on your holiday destination, it’s also worth looking at where the pound is performing the best if you want to get more for your holiday money.
Buying travel money at the airport
It should be no secret by now: the rates at airport currency exchange desks are absolutely abysmal.
We found that the average exchange rate offered at airports around the UK was 19% less than the official market rate, with some airports offering rates as much as 29% less.
If you took £1,100 in cash on holiday – which is the average amount of holiday spending money for Brits – you’d stand to lose as much as £187 worth of euros by exchanging your money at the airport.
Top tip: Always avoid exchanging money at the airport. You’re likely to be faced with the worst exchange rates in the country. If you do need travel cash, we offer over 35 currencies with next day delivery.
Paying in pounds
Would you like to pay in sterling or local currency? It’s the sort of puzzling question you might face in a bar, hotel or other establishment overseas.
While paying in pounds might seem the easier option for keeping track of spending, in doing so the merchant is able to define the exchange rate used to convert the transaction from the local currency back into sterling. This profit-generating scheme is known as Dynamic Currency Conversion (DCC) and could be costing Brits abroad £881 million, collectively.
Top tip: Always pay in the local currency and never pay in pounds. If you’re given the option to pay in sterling, say no and write ‘DCC rejected’ on the bill. To avoid DCC completely, opt for a prepaid Mastercard currency card which, as of April last year, are no longer vulnerable to DCC.
Using cash machines abroad
Sometimes you need cash in a hurry and you just head to the nearest ATM. But beware: every year, holidaymakers shell out a massive £315 million in fees – £285 million on debit card fees and £30 million on credit card fees – for using ATMs overseas.
For example, the average ‘non-sterling’ fee for using a debit card to take cash out at an ATM is 2.82% with an average ‘cash’ fee of £1.68 per withdrawal. For credit cards, the average non-sterling fee charged by high-street banks is 2.87% with an average cash transaction fee of £2.57.
Top tip: If you want to use cash to pay for things abroad or even just have some as a back-up to your card, it helps to take cash with you. Make sure you understand how much you’ll be charged for ATM use by your provider, so you don’t get any nasty surprises while abroad.
Picking the wrong plastic
Just because you don’t use an ATM abroad, that doesn’t mean you’re safe from charges. Collectively holidaymakers could be stung for making standard debit and credit card purchases overseas to the tune of £2.6 billion based on average purchase and transaction fees.
Just one in five (22%) holidaymakers review the likes of credit or debit card fees before they go abroad, meaning four in five (78%) are vulnerable to being caught out by unexpected charges.
Top tip: Make sure you’re aware of the charges for using your credit or debit card abroad, as you could face both a transaction and non-sterling fee. If you're still doing your research why not check out our comparison of prepaid, debit and credit cards.
It’s hard to gauge how much money you need on holiday and it’s easy to take way too much, just in case. In fact, our customers using their FairFX Euro Card tend to return from holiday with an average of £177 of leftover currency still on it. If all British holidaymakers returned with this amount of leftover currency, it would total an eye-watering £5.5bn.
Top tip: Whilst changing currency back to sterling leaves holidaymakers at the mercy of buy-back rates, using a prepaid currency card means leftover holiday money can be easily accessed for future trips, switched to a different currency or spent when back on home soil.