We have been through two deadlines for Brexit in the last three weeks, and now, with the EU and UK having agreed a further delay to Brexit – possibly until 31 October – we are into Brextension.
But we have seen enough political manoeuvring. For many of us the most pressing question is – what will it mean for holiday plans?
We could still find ourselves crashing out of the EU with no agreement – and doing so before the end of October. It could send the value of Sterling plunging and mean problems with credit cards. But there are ways to Brexit-proof your holiday cash.
Buy your holiday money early?
A no-deal exit could drive down the value of Sterling, meaning that you will get fewer euros for your cash. This might make it very worthwhile to buy Euros now.
The problem is that Sterling would probably head up if a deal is finally agreed, and the majority of MPs want to avoid a no-deal departure. This would mean that buying your Euros now would be expensive. Your pounds might buy more if you held on.
No-one knows what the future holds for the exchange rates (London traders would like to hear from you if you do). You might want to buy some Euros now, and the rest when you are ready to fly off – reducing your potential losses, even if it could mean missing out on a potential windfall.
Don’t buy your Euros at the airport
Whenever you decide to change your money, don’t leave it until the airport. Airport bureaux de change generally offer the worst rates, because people using them have no other choice. Buy your foreign currency in advance from your bank or online. Shop around, and if you do buy online, check that you are dealing with a genuine provider
Will surcharges be making a comeback?
EU rules banned retailers from charging customers for using Visa and Mastercard debit and credit cards within the EU in January.
A no-deal Brexit would mean the ban on surcharges would stop applying to cards issued in the UK. European companies including airlines and hotels could re-introduce charges of 2% or more for UK customers.
So, if you are booking a European holiday or with a European company, it may be worth doing so now.
Play your cards right
Many of us, use our cards to pay for everything these days. It does mean we can forget all about changing money – but will mean coming home to a nasty shock when the bills come in.
ATMs and card machines will often give you the option to convert your transaction into pounds.
The exchange rate offered by the machines will be punitive. But the costs don’t stop there.
Providers can charge fees when using your plastic abroad. Foreign exchange commission of up to 2.99% interest charges, that start the moment the card is used and even a 3% fee when you take money out of a ATM.
Some will also add an extra ‘penalty fee’ every time you use your card abroad.
The solution? Take out a fee-free debit card. Several providers offer fee-free transactions and cash withdrawals anywhere in the world.
If you want to spread the cost of your holiday fun, get a fee-free credit card for using abroad. These are cards that waive the non-sterling transaction fee and the cash charges – but all charge you interest on cash withdrawals at high rates, so if you are using this kind of plastic, avoid cash altogether.
Nobody knows how long Brextension is going to last, so it may be time to finalise your holiday plans. You may also want to start thinking about your finances in general when (or possibly if) we eventually leave.
Whatever your financial plans, at Continuum, we would be very happy to help.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.