The accelerated exchange rate of the pound against other currencies mean that it could be a fruitful time for Brits looking to purchase their travel money, according to expert opinions.
The value of the Euro has decreased rapidly due to the Eurozone crisis. This has fuelled estimations that holidaymakers could gain more for their pound than recent years. Last Summer, customers buying £100 of Euros would receive approximately €111 whereas at current exchange rates they would be likely to get around €122.
The dollar rate has also seen a boost in the sterling's favour and travellers could find themselves receiving $160 dollars for £100 as opposed to approximately $142 last year.
Some experts have encouraged those taking a holiday later in the year to buy their travel money sooner rather than later, cashing in on the currency rate boost. Director of currencies.co.uk, Stephen Hughes has described the pound’s current state as “the best it has been for years against all other major currencies”.
He went on:
“With that in mind we would advise those looking to exchange sterling to be wary of the recent pound strength and look to exchange as soon as possible.”
However, other experts have predicted that this increase could mark the beginning of further movements to come. Chris Towner of HiFX brokers stated:
“Buying euros must be tempting right now, but I think the UK economy is in much better shape than the eurozone so there may be more of a rally to come.”
Although the currency buying trend tends to be exchanging currencies at walk-up services, returns could be even greater for travellers who decide to pre-order their holiday money online and collect at the airport. Ollan Kerrison, currency expert at Moneycorp explicated that while airports are often the most convenient place to pick up currencies, they may not offer the best rate:
“While the price of currency at these locations is not very competitive because of the relative convenience, you can get a better rate by reserving online before you fly (sometimes only minutes before you pick up your currency). It's free to do so, and you'll usually get the online rate as opposed to the airport rate.”
Research conducted by Moneycorp reiterated that customers who pre order their currency and then pick it up at the airport could receive around €598 for £500 compared to approximately €548 at airport walk-up services as you would be receiving the online rate.
There are a number of methods buyers can use in order to ‘lock in’ on current rates. Purchasing prepaid currency cards could be a cost-effective way of securing exchange rates. Consumers can load an amount of their choice onto a card which can then be used in outlets and ATMs abroad. The benefit of buying these while the sterling rate is strong is that amount will be exchanged at the current rates and the amount you receive will remain the same on the card, whether the currency rates fluctuate or not. A number of providers supply these cards including The Post Office, Travelex, Carlton FX, FairFX and Virgin Money.
James Hickson, MD of Carlton FX suggests that moreover than purely locking exchange rates, prepaid cards can also be used as an effective method of budgeting and securing your holiday money:
"One of the main benefits of using a pre-paid card, rather than carrying cash or using your debit card, is that the money on the card is not tied directly to your bank account. This ensures you're able to plan exactly how much cash you take with you as spending money, but also means that should your card be lost or stolen, your overall bank account is protected and a replacement card can quickly be reissued to you, wherever you are in the world."
Credit and debit cards are often favoured by holidaymakers in case of emergencies. However it is important to ensure that you are aware of any charges that may occur for spending on your card abroad. Moneynet’s Andrew Hagger warns:
“The card charges that catch most people out are those levied for card purchases which are subject to the usage fee, plus up to an additional £1.50 transaction fee regardless of the amount.”
Other holiday money saving tips include always choosing the card option to pay in the local currency to avoid poor exchange rates and also paying off your holiday credit card bill when the statement arrives to counteract hefty interest charges.