In Depth

Why you shouldn't leave buying foreign currency to the last minute

The pound is likely to remain volatile for a while - and buying in advance can get you a much better deal

The markets hate uncertainty and this month’s election result has made the UK political situation more, not less, stable. As a result the pound took a tumble from around $1.30 against the dollar to below $1.27 - and it remains around $1.275 now.  

For those preparing for their holidays abroad, this has left them facing a more expensive trip to the foreign exchange.

Over the next two years there is bound to be a lot of uncertainty as the UK heads towards Brexit and this means the pound is likely to have a bumpy ride. So, how can you avoid a painful financial sting if the pound is down and you need to buy your holiday money?

Try following these top tips.

Buy your money little and often

No-one can time the market - and the market has been defying the predictions of even the most noted experts of late.

That means you cannot predict when the pound is going to be having a good day and sweep in and buy your foreign currency at a bargain price. However, you can avoid the big hit of having to buy all your currency when the pound is weak by slowly stockpiling your foreign currency.

Get a pre-paid currency card, such as those offered by Resolute or Monzo, and slowly put money onto it over a number of weeks or months. This not only allows you to spread the cost of your holiday money but it also means you will buy currency on some days when it is cheaper than others, smoothing out the fluctuations in the value of the pound.

Lock in a rate

Some foreign currency providers, including Moneycorp and Travelex, allow you to preorder your foreign currency at no additional charge for pick up in 14 days time.

If you plan ahead and order 14 days before your holiday you are locking in the foreign exchange rate on the date of your order. This could work out well if the value of the pound falls over the two weeks. But, you also don’t have to miss out if the value of the pound rises: you can always cancel your order and make a new one.

Get the best rate

If you have to buy your currency when the pound is weak then it is really important that you get the best possible exchange rate. Buy your currency at the airport and you’ll pay 26 per cent more than if you had planned ahead, according to research by FairFX.

The easiest way to get the best possible rate is to visit TravelMoneyMax.com. Type in how much of what currency you want to buy and it’ll compare credit cards, debit cards and foreign exchange bureaux to tell you the best value way to get that money.

When I checked it showed a difference of almost €50 between the best and worst rates for exchanging £1,000 into euros. The best rate would also buy you €250 more than if you waited to exchange your money at the airport.

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