Exchange rates move fast and there are hundreds of different rates available on the market, so if you want to get the most foreign currency.
The exchange rate is how much foreign currency you can buy for another — generally in the UK we mean how much you can buy for £1.
There are around 180 currencies used across the world, but about 20 currencies make up the bulk of transactions; here's a list of the most widely used currencies.
|Symbol and code
|United States dollar
|New Zealand dollar
|Hong Kong dollar
|South Korean won
|South African rand
The rate you see in the news (or if you stick “pounds to euros” into a search engine) is not the rate you’ll get for your holiday money. This is the interbank or ‘perfect’ exchange rate, and is the market price of currency that banks and wholesalers will pay.
However, the average holidaymaker won’t receive this rate. There are commissions, fees and other mark-ups that’ll be added to the rate offered to the general public.
Different bureaux will have different limits (depending on the amount of each currency they have in stock) on how much currency you can buy, but usually you won’t be able to take any more than the equivalent of €10,000 in cash, whether you’re buying the cash directly or taking it on a prepaid card.
If you take more than the value of €10,000 out of the EU area you will need to declare it to HMRC and you may require specialist help.
There are a few ways to get travel money, and the rate will vary depending on the method you choose.
There's no hard and fast rule on how to get the best exchange rate for travel money as rates will vary depending on how you choose to get your foreign currency.
As a general note, it’s worth keeping an eye on exchange rates which can move rapidly and significantly, so buying when the pound is high can really make a big difference to how much spending money you'll have on holiday.
You can normally buy almost any currency in cash form from high street bureaux de change or Post Office branch. But they may need to order in some rare or obscure currencies for you.
Rates will vary between different bureaux, and even different bureaux from the same franchise might offer different rates. So it’s worth shopping around.
You can also find special offers such as being able to sell back any of your leftover foreign currency at the same rate you bought it for.
Generally, the most expensive exchange rates will be found at airport bureaux de change, so it pays to be prepared and arrange your currency before you travel.
Ordering your travel money online is often cheaper than getting it from the high street. You can normally either arrange to have your currency delivered to your home via secure courier, or pick it up from a bureaux de change or other high-street or airport location.
As with their high-street counterparts, online bureaux should offer most currencies, but if you need a less common currency you might have to check a few different sites to find it. Or just get in touch with a currency specialist.
Again rates will vary between different companies, so make sure to shop around and get the best deal.
Pre-paid cards are plastic payment cards that you can pre-load with currency and withdraw as cash at ATMs overseas, or spend on as you would with a debit or credit card.
Most pre-paid cards come with an online account or app that you can load money to from your bank account. You can then exchange at the rate on the app or online account. Generally these rates are very competitive.
Though make sure to read through all the small print before getting a card, as many pre-paid cards charge fees to load the card with money or when you withdraw cash, which will eat into your exchange rates.
Credit and debit cards will exchange at a rate set by the card’s payment provider (so one of Visa, Mastercard or American Express), this rate is often very close to the interbank or perfect exchange rate.
However, most credit and debit cards will charge a fee for transactions overseas, usually called "foreign transaction" or "overseas usage" fee. These fees are normally around 2% per transaction so can soon add up and eat into even the most competitive of exchange rates.
But there are cards that don't charge these fees and allow you to spend at highly competitive exchange rates. These are usually called travel credit cards.
Some bank accounts don't charge fees for cash withdrawals or spending overseas, but often this comes with restrictions such as only being free in certain countries or up to a maximum amount.
If you are ever offered the chance to pay for anything in GBP or pounds sterling, it’s best to avoid this, as often it’s just a way for banks to charge a sneaky commission for the so-called the “dynamic currency conversion”.
If you pay in the local currency your transaction will be exchanged at your card provider's rate, which is typically much better.
Also avoid withdrawing cash with your credit card as this will typically incur extra fees and charges, as well as paying a higher rate of interest from the moment you withdraw money with your card.