I’m a travel money expert – five costly mistakes to avoid with your holiday cash this summer

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HOLIDAYMAKERS heading abroad this summer need to avoid some common spending traps that could be costing them a fortune.

Many people won’t have been overseas for a couple of years, and may be out of practice at the best ways to spend in a different country.

But it pays to know simple tricks to get the most out of your holiday cash. 

Laith Khalaf, investment analyst at AJ Bell, is part of The Sun’s Squeeze Team panel – a team of experts who are here to help you bust your bills and navigate the cost of living crisis.

Laith said: “It’s really important to plan your holiday money in advance.

“If you leave it to the last minute, you’re likely to find yourself with a poor set of options and could end up paying out hundreds of pounds more than you need to.”

Whichever way you prefer to spend when abroad – whether by cash or card – some simple swaps could mean you get a lot more bang for your holiday buck. 

Laith has rounded up his best tips to make your money go further this summer. 

Cash 

If you cash when you go on holiday, it pays to be prepared.

Buying your dollars, euros or any other currency in advance will get you a much better deal. 

Exchange rates are much worse if you leave it until you’re in the departure lounge.

Laith recommends using MoneySavingExpert’s website TravelMoneyMax to find the best exchange rates.

It lets you search by current, your location and whether you want to pick up your cash or have it delivered. 

“You can even order ahead and collect at the airport, and you’ll still get a much better rate than if you turn up and buy your currency on the day,” said Laith.

Something else to look out for is a buy-back guarantee.
“This means the exchange bureau will buy back your unused travel money if you have some leftover at the end of your trip,” said Laith. 

This can save you money as you lock in an exchange rate in advance that the exchange will buy the currency back during summer trips. 

Debit cards

Stop and check before using your trusty debit card overseas.

Most standard bank accounts will charge you every time you tap your plastic in a different country.

If you do want to spend on card while on holiday, it’s best to find a debit card with no fees.

“Starling Bank and Chase Bank are good options. Neither have fees for spending or charges for withdrawing cash from an ATM,” said Laith.

“These accounts will also give you Mastercard’s foreign exchange rate on the day, which is usually pretty good.”

With Chase you could even make back some of your spends – it pays 1% cashback on any spending you do through the account for the first 12 months.

Credit cards

“Some people prefer spending on a credit card while abroad as they can offer a little extra protection on your purchases or if you lose your card,” said Laith.

Purchases made on a credit card are protected by both Section 75 of the Consumer Credit Act and charge back, both of which can help you get your money back if something goes wrong with goods and services you paid for – if they’re faulty or don’t arrive, for example.

But be sure to clear your balance in full at the end of the month, otherwise you’ll start racking up costly interest charges.

Laith rates the Halifax Clarity Mastercard as a decent overseas credit card option – it doesn’t charge fees on spending or ATM withdrawals.

Pre-paid cards

A pre-paid card can be a great way to stick to your budget while on holiday and lock in a decent exchange rate ahead of time on a summer holiday.

These are a bit like a debit card, but you load it with cash before you go – that means you’re effectively converting your holiday money into your currency of choice, but you don’t have to carry it around like cash.

“You can also load the card with sterling and still spend on it when you’re abroad – you’ll get the exchange rate on the day you spend it,” said Laith.

He said pre-paid cards worth considering include those from Revolut, Wise and EasyFX.

But be sure to read the small print first – some may have fees or restrictions on the amount of cash you can withdraw in a day, for example.

At the ATM

If you’re taking money out of the ATM while abroad, make sure you’ve checked what the charges are.

Another thing to watch out for is which currency you choose to pay in.

Usually the machine will ask you whether you’d prefer to withdraw in sterling or the local currency – always choose the local option.

This is because of something known as dynamic currency conversion, where the shop, restaurant or retailer decides the exchange rate you’ll pay – and it’s usually much worse than the one your bank will give you.

Laith said: “The wording can be pretty bamboozling, but you’ll almost always be better off if you pay in the local currency – particularly if you’ve picked a decent overseas spending card.”

This is something to keep an eye out for when paying by credit or debit card at a restaurant or shop too during summer trips.

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