Always pay in the local currency on holiday to save HUNDREDS of pounds
CHOOSING to pay in sterling when you're on holiday could end up costing you almost 20 per cent more than if you chose the local currency.
This simple tip is often forgotten by holiday makers when settling the bill abroad.
MoneySavingExpert Martin Lewis previously warned about the high conversion rates charged by overseas cash machines or shops.
And an investigation by and confirmed that sticking with sterling could add as much as £17.74 on a €200 transaction.
Online bank Starling sent a pair of identical twins to Berlin for the weekend where they spent the exact same amount of money - except one paid in pounds and the other paid in euros.
The experiment found that having both spent €334.47 in total, the twin paying in euros paid the equivalent of £295.83 while the twin who paid in pounds spent £317.73.
How can I get the best currency rates?
WE spoke with Hannah Maundrell, editor-in-chief at money.co.uk to find out how you can guarantee the best rate when you go on holiday
- Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning
- Compare travel money companies online – Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling – This will help you avoid sneaky exchange fees
That is a £21.90 difference for paying with pounds over paying in euros.
It can be tempting to pay in pounds as it's easier to see exactly how much you're spending but you'll get a better deal if you switch to the local currency.
When you pay with pounds the foreign bank, restaurant or shop can set their own conversion rate to figure out how much you owe.
These are often worse than the exchange rates set by Mastercard or Visa that your bank would normally charge you.
In Starling's experiment they found that most transactions differed by just a few pennies if you pay in pounds rather than euros, but even a small amount like this can really add up over a holiday.
Travel money firm Fair FX estimates that the difference between spending in sterling over local currency costs British tourists around £500million every year.
One way to get around these fees is to is to use a travel credit card abroad.
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These cards won't charge you for interest on holiday spending but you will have to pay interest on any you cash you withdraw.
Knowing the right time to buy your holiday euros can be tricky as the exchange rate goes up and down.
In the past, we've reported on how airport money exchanges continue to offer paltry rates to holidaymakers.
We've also revealed how to get the best deal on holiday money and currency deals.
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