The flights are paid, hotel booked and travel insurance bought. But that’s not all you should think about before travelling. A little planning for your travel money could go a long way. But what are your options?
Good choice – Metro Bank Account
Bad choice – Cash at the airport
Cash
The traditional method for most involves exchanging large chunks of cash in a bank or on the high street. Some retailers offer fairly reasonable rates; Sainsbury’s, Tesco and M&S to name a few, but it’s also very easy to receive a poor exchange rate.
Security is a major problem with lots of cash. Where to keep the stack of notes whilst on holiday? How much cash to take? Too much and you have to convert it back when you get home. Too little and you may need to start using your credit/debit card – potentially running up fees each time you use your card.
Pre-paid Travel Cards
Ever more popular, pre-paid travel cards allow you to buy currency online that is placed onto a credit card. You can then use this card to make purchases abroad for free. Beware though – you may still get charged for withdrawing cash abroad.
When topping up the card you will buy currency for at a fixed rate, on that day. This is great if you get a good rate, but bad if rates drop the day after you bought €500!
Shop around to find the best travel card for you. Easyjet have a travel card which charges zero fees on ATM withdrawals, top-ups and on purchases. FairFX also has a free card, but charges €1.50 per cash withdrawal.
Bank Accounts
Caution is required when using your UK bank account abroad as some charge outrageous fees. Barclays will charge you 2.99% non-sterling transaction fee when using your card aboard, with a £1.50 fee ON TOP if you are withdrawing cash. So withdrawing £100 in euros will cost you a staggering £104.49.
Luckily, there is an alternative. If you are a UK resident, and have a current account with another bank, you can walk into Metro Bank branch and leave having opened a current account, with a chip and pin card in your pocket.
You can transfer money into this account from any other UK bank for free, just like you would if you were paying someone through bank transfer.
Metro Bank doesn’t charge any fees on transactions and cash withdrawals in Europe, and only very small fees outside Europe. Additionally, because you have an actual UK current account, you can use the debit card in the UK normally.
The advantages of having a second current account which you use abroad are plenty, but here are a few key ones:
- Transfer money both ways (Metro to other account and vice versa)
- No transaction or withdrawal fees abroad
- Contactless payments home and abroad
- Use the account anywhere, including the UK
- No need to buy euros which you can’t exchange back
The Future
Travelex have recently piloted a new card called the ‘Supercard’. Linked to a mobile app, this card effectively lets you use your UK cards abroad with no fees as all transactions go through Travelex. The pilot scheme has closed, but hopefully the system will roll out properly soon. We think this is a great system, and the ideal way to pay and withdraw cash abroad.
Top Tip
Finally – when asked whether you would like to pay in local currency (e.g. Euros) or Sterling, the best answer is normally Euros. Paying in Euros gets the Visa or Mastercard rate where as Sterling gets the card machine’s exchange rate – which is probably much higher than Mastercard or Visa’s.
However, if you haven’t thought ahead and are using a card that has a large non-sterling transaction fee, like Barclays, paying in Euros will mean you don’t get charged that fee. The non-sterling transaction fee is probably going to cost you more than the rate difference between Mastercard/Visa and the card machine.
