Will the plummeting pound hit your holiday cash?

Simon Read
Friday 01 March 2013 20:30 GMT
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Travel money firms have been reporting record orders this week as holidaymakers rush to secure current rates among concerns that the pound could fall further against the value of the euro and dollar.

Travelex said sales tripled earlier this week while Sainsbury's Bank reported a 182 per cent increase in online orders. The panic buying has been prompted by fears that the pound could slump after the UK economy saw its credit downgraded last week. The move saw sterling fall to its lowest level for nearly three years against the US dollar and to a 16-month low against the euro.

"While no-one knows exactly what will happen, all the recent data and expert opinion has suggested that there is a long road ahead for the UK's economic recovery, which will likely weigh on the pound," warned David Swann of Travelex.

He said the pound's slump has meant holidaymakers are now getting €72 less for every £500 compared to the high reached last summer.

But while there could be further falls ahead, anyone buying currency now risks paying more than they need to. If the pound recovers, then early buyers will have less holiday cash.

Essentially, if you have savings available and are happy with the rate you can get on currency now then go ahead and buy it. But buy online – not the high street – for the best rates.

Also think about buying a pre-paid card. Often rates are better and you can leave cash on the card and so avoid worrying about fluctuations.

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