Fiona, as well as being a good friend of mine, has a brilliant blog over at FromFiona and I’ve asked her to write a guest post for me using her knowledge from her previous role in currency. Read this post to find out everything you should know when buying or selling currency for your trips. Do go and check her blog out once you’ve read this, and let her know I sent you! You can also read my tips for using a credit card when you travel, and side hustling enough to fund a trip.
Travel currency-everything you should know
I used to work in currency and I’d been trying to work out the best way to help other people save money and share my knowledge gained in the four years of that job. I’ve listed the main questions that I’d be asked along with how to do the research before you even consider whether what you’re getting is a good deal or not. I’ll be covering whether you need to take cash with you or if a bank card is enough, the benefits to international bank transfers (including which services to use), the benefits to a buy back guarantee and all the things to do and not do when speaking to a currency cashier about your purchase.
Do your research!
I’ve tried to list all the options but the main thing to do is research. If you have a trip planned, keep an eye on the exchange rates for a few weeks before you go away to see if they’re fluctuating or if they’re pretty stable. This can sometimes be determined by where you’re going. For example the Euro and the US Dollar fluctuate regularly but there are other currencies that are more stable and less affected by the value of GBP (Great British Pounds).
Now this is where I need to explain what I mean when I say research. Do not whatever you do use Google or an app like XE to research exchange rates. These sites use what is referred to as the spot rate or interbank rate which is the rate you would get if you were transferring a large amount (think millions) between banks. As a consumer you’ll never get this exchange rate and it makes it look as though actual rates at a bureau de change aren’t high enough if this is the rate you use for your research. The other thing to be aware of is that in-branch and online rates will always be different. There is always a higher rate online due to the fact it’s classed as an online banking transaction and therefore gives a higher exchange rate automatically.
My advice for researching rates is to choose which retailer you’re likely to buy from and keep an eye on the rates on their website (or in branch) for the value of currency you’re looking to buy. Where I worked we often did a higher rate when you purchased more currency but there usually wasn’t much difference (beyond a couple of pounds) in what the customer was paying.
The main thing to bear in mind when looking at exchange rates is when you’re buying currency you want the number to be higher and if you’re looking to exchange back to pounds then you always want the number to be lower.
Cash/bank cards/currency cards – which do I need?
I would always advise taking physical cash to any country you visit as well as your card. While there are some countries like Sweden who are going cashless there may still be times where you need the cash at hand rather than on your card. However, I do like the safety net of the currency cards that are available. My personal favourite is the cash passport by Mastercard as it’s fully insured and the rate you get to top up the card is the Mastercard exchange rate which is 1% away from the spot rate and one of the best rates on the market. The reason I like this card is when spending you’ll be spending in the currency you’ve topped up with and if you need to withdraw you’re withdrawing in local currency too. The downsides are you’re charged per withdrawal and it can cost a lot to convert any leftover funds back to pounds.
In terms of using a bank card abroad I would double check with the bank what exchange rate they offer and if they charge you for making transactions abroad. If you have a Monzo card they use the same Mastercard rate as the cash passport and the money leaves your account the same day. Some more traditional banks can wait to process your transaction at a different exchange rate to the one on the day you used your card.
The other option I came across recently is from Starling and is possibly the best method for anyone who goes to a Euro-using country regularly. When you open a current account with Starling you also get the option to open a Euro account too. With this account you use the same card you use for GBP but you spend from your euro account when spending in euros. You can transfer funds directly within the app and the exchange rate is one of the best available. Yes there is a small fee for this but it’s worth it for the ability to use your normal bank card for euro spending. I used mine to buy a clean air certificate for our car for going to France and it was as easy as doing any online shopping here. I wanted to test it with a small transaction to make sure it worked and I’ll be adding euros to my account each month before we go on holiday. Like Monzo, Starling has an app which keeps track of your spending and you can transfer in and out of your account as needed.
Should I buy online or in a branch?
You’ll always get a better rate when you buy online but I know that for some people there is a concern of doing this kind of transaction online. Also if you’re paying in cash you need to do the transaction in person. My other suggestion is to avoid online only retailers and choose one where you can go and pick up the cash in person. If you’re ordering something that may take time to arrive make sure you do this a few days before you’re due to travel and then you’re guaranteed it will arrive on time.
Online would be my recommendation as you get the improved rate and you can decide on any add-ons during the process rather than being bombarded with questions by the cashier. Collection is usually also pretty fast as you need the card you paid with and photo ID then you can walk away with the currency you’ve ordered and know you’ve got the best deal possible.
The best way to transfer money abroad
There are so many different options when it comes to transferring money abroad and I’m going to break some of them down for you to make them easy to understand.
Western Union – One of the biggest money transfer services in the world and available in almost every country in the world. This is the best way to send money if the person needs cash immediately (only ever transfer money to someone you know) or for whatever reason they don’t have a bank account. The downsides are that WU has very bad exchange rates and the charges are quite steep compared to other services. Depending on where you’re transferring to this can be the safest option as they’ve done all the identity checks required for foreign transfers.
Wise – If you’re transferring from a UK bank account to a foreign one Wise is the option I would recommend. I use them via Monzo but they have their own website that you can sign up for. They offer one of the best exchange rates for bank to bank transfers and although they charge a fee it’s not as high as Western Union.
When it comes to making foreign transfers only ever make them to someone you know or to a business account e.g. for accommodation. Be wary if someone asks for Western Union over a bank transfer as it can be a red flag. Bank transfers are highly regulated as are all currency transactions so they are incredibly safe if you’re sending to someone reputable.
What are the regulations?
As mentioned above the banking industry along with foreign currency is highly regulated by the Financial Conduct Authority (FCA) and HMRC so make sure you have a form of ID for any of the transactions listed above. Passport is recommended although lots of places will accept a photo card driving licence too. Also don’t be surprised if you’re asked questions about what you intend to do with the money. This can be to try and upsell additional products or services but can also be to identify any criminal behaviour. So long as you’re honest you have nothing to worry about and the staff asking for ID etc are just doing what they have to as part of their jobs.
What if I come back with money?
This is a question I was asked a lot as a currency cashier and it was always the hardest to answer. The company I worked for sold a buy back guarantee which meant if you paid £4 you could return a percentage of the money you’d changed and get it back using the original exchange rate which basically meant a refund.
Depending on how much you’re buying and if you intend to visit that destination again it can be a viable option for you. For weekend visits to places like Poland, Czech Republic or Hungary I’d always recommend it as it’s somewhere you may be unlikely to return to. For Euros or US Dollars it can be a different story as you may use the currency for another trip.
If you can afford it I would recommend paying the extra as it provides a security blanket to change that percentage back at the original rate. With travel uncertainty still very much an issue right now buying the buy back can also mean a better rate if you need to change all your currency back to pounds as well.
Listen to the staff
My final recommendation is if you go to a bureau and ask for advice then pay attention to what you’re told. This also applies if you ask for the wrong currency for a destination. Some European countries don’t use the Euro and have their own currency instead. If you ask for Euros and then say you’re going to somewhere like Poland they will tell you to buy Zloty instead. This is for your benefit so you have the right money when you get there and is also the reason they ask you where you’re going.
The staff know what they’re talking about and although part of what they’re doing is trying to convince you to take certain add-ons or to spend a bit more than you had planned they will give you genuine help to make sure you have what you need.
Well, that’s all my tips on how to buy currency, get the best exchange rate and make transfers into foreign bank accounts. The intention with this post was to make the concept of buying foreign currency easier to understand and demystify some of the terms and processes used. I’m not going to recommend a specific company other than the links already within this post as there are several out there who are all very similar and offering essentially the same services too.
Do you take currency when you travel, or are you a card only sort of person?
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