Summer holiday essentials: travel money, credit cards and exchange rates

Everything you need to know, every day this week

It's best to buy euros or dollars in the UK (Shutterstock)

Since the EU referendum, the pound is down against the two crucial currencies, the euro and the US dollar. It has sunk by about 12 to 15 per cent (as predicted by the Treasury). That has pushed the price of everything from a cup of coffee to admission to top attractions abroad through the roof. The Louvre in Paris is the most expensive it’s ever been, at €15 (£13), while a trip to the top of New York’s Empire State Building will set you back $32 - which not so long ago was worth £16, but is now £25.

Unless you are an international financier, you cannot do much to influence the feeble state of sterling, but you definitely can minimise the amount that the banks or bureaux de change collect when you change money. So when you have trawled the internet or the high street for the best holiday deal, found an annual no-frills travel insurance policy that costs less than a pizza in Pisa, and booked airport parking or a train to the terminal at bargain rates, you really need to sort out your holiday money smartly. If you leave it to the airport (or ferry port, or Eurostar terminal), to change cash, you are throwing money away.

Do I change money now or just before my holiday?

With sterling slumping, it’s more important than ever to stretch every pound. But it depends what you think will happen to sterling, which is affected by all manner of things. Some financial forecasters such as HSBC and UBS are suggesting the pound could fall back to parity - one euro to one pound, about one-sixth worse than today. That’s because they fear foreign investment in the UK will drop. But others say that there’s no reason to expect the seizing up of investment and therefore the pound could improve.

If you can afford to take the risk that it will fall further, then wait until shortly before you go away. Otherwise, try to lock in at £1 to around €1.15 or $1.25

How can I get the best deal for euros or dollars?

Compare rates for euros and dollars online, and on the high street - where travel agents and specialist bureaux de change are getting more competitive. Consider ordering in advance and picking up at the airport, or ordering by post.

When you are comparing rates, simply ask: “How much, in sterling, will it cost me to buy €500?” (or however much you want to change, in whatever currency). That will iron out all the wrinkles such as commission charges, delivery fees, etc.

What about other currencies?

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 in the destination, so I just take sterling cash.

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 (loading-fee-free) Halifax Clarity credit card wherever possible, which is almost everywhere these days. However, in Denmark they have an extra fee on foreign credit cards.

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. The same goes for resorts in countries such as Mexico, the Dominican Republic and Thailand which get a lot of UK visitors - for example Cancun on 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, taking US dollars (bought here at the best possible rate you can) is a smarter idea.

What is the best plastic to take?

A credit card without any charges for being used abroad - which means something like my credit card, mentioned above, or the Metro Bank debit card.

The Supercard by Travelex - which links to a domestic credit or debit card - looks like a smart development, and much easier than managing pre-paid cards. But I’ve not yet been able to test it.

Whenever you’re paying with plastic, beware of dynamic currency conversion – if you’re invited to pay in sterling abroad, say no, or you’ll be charged an additional 5 per cent or so.