How to get the best deal on your holiday money abroad

How pathetic is the pound these post-Brexit, post-election days? Well, consider the traditional near-certainties about pre-euro currencies. British travellers were comfortable knowing that £1 would buy 10 French francs or three German marks.

When the euro took over, the old exchange rates were baked in, so you can work out the equivalents now. Or, better still, get me to do it.

Today, at the best online rate I could find (£1 = €1.11) the pound is above seven French francs or two Deutschmarks, but not by much.

The pound:dollar rate has tended to fluctuate, but at £1 = $1.25 it is really bumping along the bottom. As a result the price of a trip to the top of New York’s Empire State Building has soared to its highest ever in sterling terms. A family of four (including two under-13 children) will pay over £171, including an $8 charge which is described, with a straight face, as a “convenience fee”.

Convenient for the operator, not for British tourists. So w ith sterling sicker than a Somali shilling, here’s my summer guide to stretching your pounds abroad.

A credit card without any charges for being used abroad. Between now and the end of August 2018, I am doing all my overseas spending/cash withdrawals on a Barclaycard Platinum Visa card. For the next 15 months, this credit card has no non-sterling transaction fees on foreign spend (which other good cards, such as Halifax Clarity and Post Office Platinum also offer). But crucially the Barclaycard Platinum Visa also has no charges or interest on ATM withdrawals (which I am not aware any other credit card offers) so long as you pay it off in full every month. For a trip to a large number of countries, it is ideal.

Whenever you’re paying with plastic, beware of Dynamic Currency Conversion (DCC): the practice of inviting you to pay in sterling abroad. If you agree, you’ll be charged about 5 per cent over the correct rate.

There have been reports of some merchants abroad automatically selecting DCC, which should become evident when you are handed the terminal to tap in your PIN. If it happens to you, tick them off and demand to pay in the local currency.

In a few locations in Europe, such as Cyprus (where there is a big British community) and Estonia (where margins for all currencies are very slim) you can get excellent deals changing sterling notes for euros. But for most destinations it's best to shop around and get them in the UK. Start by looking at the “Fast Track Collection” rates from Thomas Exchange Global. This is a good foreign-exchange specialist, but annoyingly it has branches only in and around London. But wherever you are, the firm’s rates give you a good baseline to aim for. At the time of writing, £1 bought €1.11 or $1.25.

You can often get a similar deal by going online to one of the big airport bureaux de change, such as ICE, Moneycorp and Travelex and paying in advance to pick up at the airport. They will also send money by post or courier, but that adds complexity and cost.

Also have a look on the High Street as well, where travel agents and specialist bureaux de change are getting more competitive. Always ask, “In sterling, will it cost me to buy €500?” or similar. That will iron out all the wrinkles such as commission charges, delivery fees, etc.

Sterling. Just because Croatia and Bulgaria are in the EU, that doesn’t mean their currency is the euro. It’s the kuna and lev respectively. And in those countries, as well as Turkey, you get significantly better rates at local bureaux de change in the destination, so just take sterling cash.

As with euros and US dollars, I always try to source Australian dollars, South African rand, Swiss francs and Canadian dollars in the UK. The rates here are normally good.

For the rest of the world, I don’t change here. In Dubai, and touristy parts of the UAE, there are plenty of good bureaux de change offering excellent rates for sterling notes. The same goes for resorts in countries such as Mexico, the Dominican Republic and Thailand which get a lot of UK visitors - for example Mexico’s Yucatan peninsula, Punta Cana in the Dom Rep, or the Thai island of Koh Samui. But away from tourist areas in these countries, and in other parts of the world, take US dollars (bought here at the best possible rate you can).

Nordic cash is trickier. As “minority currencies,” Norway, Sweden, Denmark and Iceland don’t have a very competitive market either here or there. So I try to use my Barclaycard Platinum Visa card wherever possible, which is almost everywhere in Scandinavia these days. The only place that really annoys me is Denmark, where there is usually an extra fee on foreign credit cards.

Almost extinct. If you have any lurking at the bottom of the sock drawer, dig them out and either change them for cash here (if they are in sterling) or take them abroad and see if you can find anyone prepared to change them. Expect to lose a slab in charges.

Cards that you load with money in sterling or other currencies are the 21st-century equivalent of travellers cheques. If the card is lost or stolen there is very little risk to your funds, you can get it blocked and obtain a replacement (though that could be tricky if you are somewhere remote). They are particularly useful for long-term trips by younger travellers: a parent can top up the card as they travel, and there is not the same risk exposure as with a credit card.

But they have several drawbacks. They cannot serve as a financial surety in the same way as a credit card when you rent a car or stay in a hotel. Keeping track of the balance is tricky. Depending on the card, there could well be fees for loading funds and for use of ATMs. And it’s all too easy at the end of the trip, when you might have a couple of hundred pounds left, to forget or misplace the card — and some firms will also erode the balance with monthly charges. So all in all, I prefer a fee-free credit card.

Use yours only as a last resort, when all other possibilities have been exhausted. Most banks apply high fees to using them abroad. Metro Bank has about the fairest terms.

Given all the uncertainty in the UK and beyond, it’s anyone’s guess. If you are you are heading for euroland or dollarland, and can afford to take the risk that sterling will fall further, then wait until shortly before you go away. Otherwise, try to lock in now at £1 to around €1.11 or $1.25.