Summer holidays are likely to be more expensive this year after the drop in the pound. Many are asking “should I buy holiday money now" as they’re worried that when they get there prices will seem higher. So our Money Saving Expert Martin Lewis is here to answer your questions and give his top tips.
1)When’s the best time to get holiday money?
Many people want to know the best time to buy their holiday money. I’m afraid that can only be answered with certainty if you have a crystal ball. I don’t know, and anyone who tells you they know is lying. Instead you need to have two aims – to get the very best rate possible on the day you do it and think about how you beat volatility.
It’s worth noting that although the pound has dropped significantly after the EU vote to around €1.17 (before it was at €1.30ish), meaning your holiday will now be more expensive, it’s not uniquely low – two summers ago the rate touched €1.15 – so this isn’t a historic anomaly. Rates move all the time. Though the rate against the dollar has dropped far more.
Instead though I want to show you how to manage the volatility. So Read on.
3)Easy way to pocket plastic and get near perfect rates for every holiday
Most debit and credit card firms get a near-perfect exchange rate from Mastercard or Visa, but then add a 3%-ish 'non-sterling exchange fee' to what they charge us, so £100 of euros costs you £103.
Specialist credit cards, like the Halifax Clarity and Creation Everyday card have no exchange fee, so you get what the financial industry calls the perfect rate, like the banks do, without that add-on. Yet of course it’s the rate on that day that you get, and so currency moves can affect it. So simply pocket one of these, only for use abroad, ensuring you repay IN FULLeach month to minimise interest (12.9%-18.9% rep APR) and then use it on every holiday.
It’s far better to spend on these cards than withdrawing cash though (as then you will pay some interest even if you clear in full).
If you don’t want or can’t get one (as you have to pass a credit score) one of those cards, the Supercard from Travelex works the same way but anyone can get it. What it does is link to your bank account or existing credit card and it does the conversion at the perfect Mastercard rate and then charges them. However, it charges 2.99% for cash withdrawals and you don’t get the extra section 75 protection you do with credit cards.
4)A trick to buy now with protection against currency swings
If you’re taking cash, while you won’t get the very best rate on the market, a couple of bureaux T&Cs can be manipulated to give you protection against currency swings.
Three big bureaux, Travelex, Tesco and Sainsbury’s let you order at today’s rate for collection before your holiday, and cancel should rates change. With Travelex and Tesco you can order for collection up to a week ahead, and cancel for free before the last 24 hours. With Sainsbury’s you can order for up to 30 days ahead, but it’s £10 to cancel – yet see the £10 as insurance especially if you’re exchanging a large amount (above £500ish).
So if the rate gets worse, well you’re up as you got it at today’s high rate, and if it gets better then cancel the order for free and buy at the new higher rate. But bear in mind that there’s no protection if the bureaux went bust whilst holding your money. But these are big bureaux so it shouldn’t be a problem.
5)Another way to hedge your bets
A simple way to guard against currency moves is buy some now, and some when you go. This diminishes the impact of rate moves (good ones as well as bad). So get the best rates now then use a specialist overseas card (see point 3) once there.
6) If you do take a specialist overseas card, always pay in euros
When abroad many shops or the ATM will ask you whether you want to pay in pounds or euros. Pay in pounds and the foreign shop or ATM does the conversion. Pay in euros and your plastic does. On holiday once (I’ve a very understanding wife) I checked the rates of dozens of cash machines and shops and every time paying in pounds cost more than in euros even on the WORST UK plastic. So if they ask, always say euros.
7)The top overseas prepaid cards
With these you load with cash before you travel, then use it like a debit card. If you lose it, your cash is protected. The rates can be very good, but unlike the options above, you get the rate on the day you load/buy, not when you spend, so for good or ill you’re at the mercy of currency fluctuations.
The top pick cards are Revolut and WeSwap. There’s much of a muchness between them. Both give best prevailing interbank exchange rates and can be used in euros, dollars and other currencies - though Revolut works in slightly more countries. If you want your money quickly Revolut won’t charge a fee, and is best for those withdrawing smaller amounts, under £500 a month. While WeSwap is best for those withdrawing larger amounts, over £200ish at a time. Otherwise there are fees.
8) Always turn your sun cream bottles around
When you jet off, there’s no need to automatically buy new bottles of sun lotion - open bottles can still be effective for up to two years after opening. The number you should find on the back of the bottle is a Period After Opening (PAO) number, it'll normally look like a jar with an open lid and a number next to it (eg, 12 or 24) - that's the number of months after opening it during which it should be OK to use, so you needn’t buy more.
9)Turn your smartphone into a free holiday sat-nav
If it’s got GPS, you can convert your phone into a free sat-nav for 178 countries without using any pricey data overseas. Just download the free Navmii app for iPhone, Android, Blackberry and Windows Phone, and before you travel download the free maps. Once you’ve downloaded it to your phone, it doesn’t need any internet data to find routes, search, or access its maps via GPS, as these are stored offline in your phone.
10)Check your EHIC card is valid – 5.3 million have expired in the last year
The European Health Insurance Card (EHIC) gives you access to GPs or state hospitals in the EU at the same price as a local. Yet over 5 million are out-of-date and invalid so check the expiry date (point 9) on the bottom right of your card now.
If it's already expired, or is about to, renew it now by applying on the EHIC website, or by calling 0300 330 1350. Calls are charged at the national rate. Mobile providers may charge. DON’T pay for an EHIC – they’re free and any site charging you is a con – even if it’s promising a fast track. Generally, it'll take about seven to 10 days for it to come through. Kids must have their own cards.
And if you’re thinking, well we’re out of the European Union so there’s no point in getting the card anymore – don’t. It’s still valid. The vote may affect this in the future, but right now nothing’s changed, and most likely nothing will change for at least the next two years. So you should carry on using it as normal.
11)Don’t wait to book your travel insurance
Far too often people ask me something like “I’ve just broken my leg, I was supposed to go on holiday in a month, the airline won’t give me my money back, what can I do?” I always ask if they’ve got travel insurance, but the answer is often “I was going to get it before I go”.
Half the point of travel insurance is to protect you if something happens before and you can’t go on holiday. So as soon as you’ve booked your holiday, book your travel insurance too. If not, you won't be covered should anything happen beforehand, such as an illness or cancellation.
There are many cheap, decent value policies available online and via comparison sites from as little as £9 for a year’s European cover for an individual. If you go away two or more times a year, annual policies are usually cheaper.
12)Book car hire as early as possible
If left to the last minute you could pay massively over the odds – for example, walk in mid-summer, and if they’ve got spare cars, you could pay £40+/day. Yet book now for August and it can cost as little as £11/day for Malaga or £15/day for Tenerife.
To find your cheapest, use a comparison site such as Kayak (good for options), Skyscanner and TravelSupermarket(both good for breadth). I’ve heard huge successes of people getting great deals by booking in advance, like Dave, who emailed:"Booked four months ahead, got 10 days for £296 for a decent-sized car. Just before I went, checked and price had gone to £900."
Plus so many times I’ve overheard the sale person at the car hire desk say “you need it; without it, have an accident, even a scratch, and you'll pay £1,000s extra” - this can be £20+/day. Yet, it’s usually included in the price and if not you can get standalone cover for as little as £2/day. Use Moneymaxim's comparison to find the cheapest. Though beware you’ll need have a credit card to leave a car hire deposit on (and it can be as much as €1,200).