Cutting the cost of that half term break

The fall in the value of sterling has made trips abroad rather more expensive lately.

With Brexit uncertainty, investors pulled out of the pound, and its value dropped on world markets. This has of course been good news for UK exports – but while everything from British digestive biscuits to luxury cars costs less for the rest of the world, a short holiday abroad for you and your family will cost much more.

So, what can you do if you are planning on a half term break this autumn?

The pound may be on the up

Progress on Brexit negotiations has helped the pound pick up against some currencies since this time last year.  As a result, it may go a little further in some holiday destinations, but you will still need to be careful that you are getting your money’s worth when you spend.

Never pay in pounds when you are abroad, even if they are accepted. The exchange rate you get will be disastrous.

So, what can you do to make your pounds go further?

Plan ahead

You will be better off using local currency – which is obviously the Euro in most destinations in Europe. But you can’t leave things to the last minute and hope that the latest fluctuation in foreign exchange rates is in your favour. The key to making the most of your holiday money and getting the best rates of exchange is to plan ahead.

If you wait until you get to the airport before you change your pounds into your destination currency, you will be paying much more than you need to. Travellers’ tales of being charged a Pound for every Euro at the airport have been all too true in recent months.

Volatile exchange rates due to political events can wreak havoc with your holiday money. Hidden fees and poor exchange rates make things worse – and must be avoided.

Your bank, and some of the few remaining high street travel agents may be able to do you a better rate, and some will even offer home delivery by courier as well as branch collection.

A look at the online comparison sites will let you find the best rates. Be careful if you find an online service that seems to offer rates that are too good to be true. You may not be dealing with a legitimate business, even when the name sounds familiar.

It’s on the cards

Using unfamiliar notes and coins used to be part of the fun of foreign travel. But not only is the Euro less exciting, cash itself has lost its charm.

Many of us have given up on cash altogether at home, and simply bring out a card whether it is a round of drinks or a family meal. It is easy to do the same abroad, which avoids any local currency.

But again, there can be hidden costs.  Most credit card providers charge an exchange rate loading fee when you buy abroad.

Never use a credit card to get foreign currency abroad – even in an ATM. ‘Special’ interest rates will be applied from the moment the withdrawal is made.

Debit cards can be even more costly. There will be the exchange rate loading charge, plus a transaction charge.

Again, there are exceptions. Metro Bank customers can use their debit cards without charge in most European countries. Credit cards such as Tandem, Halifax Clarity, Aqua Reward and Santander Zero all offer free or at least low-cost use abroad.

Use a prepaid card instead

If you are concerned that your card provider isn’t offering a good deal, the answer may be a prepaid card.  These are cards that you can preload with a local currency at an exchange rate which is fixed each day, and likely to offer decent exchange rates and low or no fees for use.

You can use a prepaid card to help keep your holiday budget under control  – but if you spend more than you thought, you can top them up locally.

You can pay for purchases just like a local card, and even use them in ATMs if you need cash. Check online for the card that offers the most competitive exchange rates for your destination.

Before you go…

A trip abroad is fun, but as well as cash, you need to make sure you have the right travel insurance before you set out.

For help with insurance finances of your holiday, and with life in general simply call us at Continuum.

The Financial Conduct Authority does not regulate banking and finance.

The information contained in this article is based on the opinion of Continuum you should consider your own individual circumstances and does not constitute a recommendation to suitable course of action.

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Book an initial consultation with one of our independent financial advisers or call us on 0345 643 0770 if you would like to discuss further.


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