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Top tips for saving money on foreign currency

Here are some top tips from EasyFX on how not to lose out financially when getting your foreign currency in place.
By Editorial on Feb 26th, 2018   @freelotteriesuk

Here are some top tips from EasyFX on how not to lose out financially when getting your foreign currency in place. 

1. Know your fees

These are the possible fees you could be charged while you are away:

  • Non-sterling transaction fee - a charge for every transaction you make with your card. For UK customers this is usually in the region of 2.75-2.99 per cent.
  • Non-sterling purchase fee - charged every time you make a purchase using the card. Usually about 0-1.25 per cent.
  • Cash withdrawal fee for foreign ATMs - charged every time you use a foreign ATM. Ranges from about £1.50-2.

These are rough estimates, and will vary from company to company. It's always good to familiarise yourself with your own bank's fees and charges before you go away. Don’t forget that on top of these fees, you’ll also be charged extra by bureau de changes and foreign banks when converting currency. 

2. Use Global Alliance ATMs

A group of banks across the world have come together to form the Global ATM Alliance, a network of major international banks who allow their customers to use their ATMs with no fees.

For UK customers, Barclays is the main bank participating in this. If you're a Barclays customer you can use foreign ATMs from banks such as Deutsche Bank, Bank of America, BNP Paribas and Westpac without being charged foreign fees.

3. Never choose to 'pay in sterling'

When using your debit or credit card to make a purchase abroad, you'll often be asked whether you want to pay in the local currency or in sterling. At first, paying in sterling seems like a great idea because you know how much you'll be paying in your own currency and there are no surprises. But don't be fooled. Choosing to pay in sterling will always be more expensive due to something called Dynamic Currency Conversion. This is where the vendor gets to set their own exchange rate, which will usually leave you out of pocket when compared to your own bank's exchange rate. Choose instead to pay in the local currency and let your bank apply the exchange rate later on.

4. Spend the time researching the options

Research shows that 27 per cent of British holidaymakers spend no time looking for a better deal on exchanging currency ahead of their trips. However, for the Brits that do spend time actively looking for a good deal, 64 per cent of them see savings of up to £100.

The rise of flight and accommodation comparison sites means that holidaymakers are all too familiar with the ways in which they can make savings when travelling abroad. However, Brits need to understand that while they may be saving on some aspects, they could be losing out on others – like foreign exchange, if they don’t spend any time searching for better deals.

Looking to the conventional comparison sites is a great place to start – a lot of these sites have travel money sections which provide you with the best options available, for example, money.co.uk.

5. Explore other ways to convert currency

Typically, holidaymakers rely upon traditional methods of exchanging currency, like visiting a bureau de change, for which 45 per cent do, or using a credit or debit card on holiday, for which 24 per cent do. However, holidaymakers need to look to other exchange methods that could save them big bucks.

Withdrawing cash abroad often has fees of up to £1.50 per transaction and carrying large sums of money exchanged prior to a holiday can be risky. By looking to alternative ways of exchanging money, holidaymakers can rest assured that they are using the smartest, most efficient and hassle-free method, making their money go even further.

One alternative is a prepaid currency card, which is a great way to carry your holiday money with less risk. Use them instead of your usual bank card and you'll be paying for everything in the local currency, thus avoiding all those foreign bank fees. They are usually completely free and involves no hidden charges. You simply top up your account with a credit or debit card, purchase your currency and start spending.

6. Don’t just look to save on flights and hotels

Hunting for better costs when going on holiday isn’t a foreign concept for British holidaymakers. Over a third (40 per cent) spend up to three hours searching for the best accommodation deal, and even more (43 per cent) spend time looking for a better deal on flights. As a result, over half see savings of up to £100 on each aspect.

If Brits were to spend the same amount of time shopping for the best foreign exchange deal as they do for flight and accommodation savings, they could see far greater holiday savings.

Nick England is CEO of EasyFX.