Posted by Allison on 5 April 2009, 10:55
Everyone looks forward to going on their annual summer holiday but the whole process of booking it and arranging your holiday currency can take some time to get through.
It's not surprising then that a lot of people simply go to the first place they think of – or the same place they usually go to – in order to get what they need. Unfortunately this doesn't usually result in getting a good deal on their money.
As with most financial products it pays to look in a variety of sources before making your choice. You can save a lot of money in this way. It also pays to check out what the current exchange rates are with various currencies before you make your decision. This will give you a reasonable idea of what to expect, although you should remember that the exchange rate given which applies to a particular currency will not be the same one that a bureau or travel agent offers on your holiday currency, since they obviously have to make a profit on it.
When it comes to deciding how much money to change up, think about safety too. You might want to cash some of your own currency into Traveller's Cheques, which offer more protection if they should be lost or stolen. Cash is more convenient but if someone steals it you have no comeback and will simply have to get more money to replace it – making your holiday rather more expensive in the process.
One of the biggest temptations for holidaymakers looking to exchange their own currency for the one used in the location they are visiting is to go straight to a commission free bureau. After all, this means they don't charge you for the privilege of changing your money up with them, right?
Actually, that is wrong, and a lot of people get caught out by it. The fact is that they have to make some money out of you somewhere, and this normally means that you will be paying a less advantageous exchange rate as a result. So make sure you compare the 'commission free' deals very carefully with those outlets who do charge a fee before you make your decision, otherwise you could end up losing money on the deal.
When it comes to getting our holiday currency to take away with us, a lot of people don't worry about shopping around for the cheapest rate. We simply go to the nearest outlet. This is surprising given the fact that we are getting rather good at comparing other financial products with a view to either saving or making money. The golden rule is to apply the same rules to buying your holiday currency as you would to every other financial product in your life.
If you are booking your holiday several months in advance of actually going, it can also pay to keep an eye on what is going on in the money markets. The rates of inflation and the performance of various currencies against one another can save you a lot of money if you get your timing right. For example if you were exchanging your British pound for the Euro you would have done well to make the exchange early in 2008. The rate at present isn't quite as good. It might take a little time to check how things are doing each day, but it's worth it if it results in you saving money in the process, or effectively getting more money to spend on your holiday.
When you consider that using your credit card when you are abroad can now be quite an expensive affair, what with flat fee charges and so on, it makes sense to get the best possible deal on the currency you will be taking with you. But saving money on your holiday currency can also extend to what you do with it when you finally arrive on holiday and start spending some of it while you are there.
For example you might try your haggling skills at local markets in order to spend less money on an item than if you were to simply buy it at the face value. In many countries this is practically the custom and it is all part of getting used to how things work in a different location and making your currency stretch as far as you can while you are abroad.
It's worth doing a little bit of research to this end before you leave for your break, since it can save you a lot of cash while you are there. Many countries also expect you to leave a tip for waiters and taxi drivers and so on, but this isn't always the case; you could end up offending someone! If you know what the custom is you can make sure you spend your currency in the right places and enter a foreign country with some confidence of how to act while you are there.
Money goes further in some countries than in others as well, which can affect the amount of currency you will need to change up before you get there. It's worth checking out how much typical items will cost before you leave; things such as meals and basic food items such as milk and bread can be remarkably different in price from one country to another and it's easier to change up enough cash before you go than it is to run out while you are there and have to get more. Withdrawing money in local currency on your bank card can be very expensive, so if you do need to get more cash try and find a local Bureau de Change whenever you can.
In short, a bit of advance planning when you are preparing for the financial side of your holiday can stand you in good stead when it comes to enjoying the event itself. So do your homework first and then enjoy yourself!