FT Money Spinners: how to make your travel money go further
The Money Spinners duo talk travel money. Personal experiences and top tips on everything from foreign exchange strategy to choosing the cheapest option on card terminals.
Produced, filmed and edited by James Sandy; Additional filming by Petros Gioumpasis; Animation by Russell Birkett
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I'm Claer Barrett.
And I'm Lucy Warwick-Ching. And today we're going to be talking about holiday money.
This is Money Spinners.
With wall-to-wall news on Brexit, you'd be forgiven for wanting a holiday. But do you change your holiday money now or do you wait?
This is a very good question, Lucy, because the Brexit effect on the pound or sterling, as it's known on currency markets, means that it's likely to be very volatile for much of the rest of this year. For example, let's imagine I bought a pina colada before the Brexit referendum in 2016. Back then the pound was trading at around $1.45. Fast forward to now, and the pound is currently trading at around $1.30, a fall of around 10 per cent.
So it could go up or down. If Brexit is delayed, then the pound could strengthen. But if we end up with a messy no-deal, then the pound could fall even further.
And some currency traders think it could fall by another 10 per cent in the event of that happening, which leaves holidaymakers with the dilemma. One strategy people are using is buying half now and half later, at the time when you go on holiday, hedging your risks.
Or you could buy a fixed amount every month. Post Office Travel Money say that people are putting money onto their prepaid cards every single month, just so that they can smooth out the currency fluctuations.
So the choice is yours. But when to buy the currency is only one aspect of how much it will cost you. If you don't want to get ripped off on changing money abroad, we have lots of other advice for you.
So here are our Money Spinner top tips. Number one, never buy currency at the airport. Research from Fair FX says that people who walk up and buy currency in the airport can pay up to 15 per cent more than the market rate. And this can go up to 20 per cent in some airports.
Number two, get a better bank card. If you spend on your card abroad, most UK banks and credit card companies will levy a transaction fee of around 3 per cent on top of whatever you're buying. However, cards from some challenger banks and certain credit cards will offer you fee-free transactions overseas, just make sure that you apply well in time before you go on holiday.
And number three, always pay on card in the local currency. The card terminal might offer you the option to pay in pounds. But paying in pounds is more expensive because the seller gets to set their own exchange rate.
That's absolutely true. On my recent holiday, I noted down the two amounts on the card terminal. And had I opted to pay in GBP pounds, I would have paid 5 per cent to 10 per cent more. It's just throwing your money away.
So those are our top travel money tips. Now you can jet away from the Brexit blues, confident that you'll be getting a good deal on your travel money.
Sounds like a great idea. We'll be back soon with more Money Spinners, maybe after a short holiday. Now, which way to the airport?
I don't know.