Your holiday money - be prepared and shop around is good advice

New research from the Office of National Statistics has revealed that UK holidaymakers spent ten per cent less while overseas over the past year. The research calculated that UK travellers' spending while on breaks abroad has declined to £31bn over the past 12 months.

As UK travellers may be watching their spending on holidays abroad, businesses like the Post Office and Money Saving Expert Martin Lewis are reminding them that they can make their foreign currency go further by avoiding foreign exchange commission charges or uncompetitive foreign currency exchange rates. Both advise UK holidaymakers to research the best deals on travel money before heading to the airport to find the best deals on their foreign currency.

The higher costs of foreign currency exchange at airports and poor foreign currency exchange rates in resort hotels or foreign currency kiosks overseas recently ranked as two of the top five holiday 'rip offs' in research from the Post Office. However, many people still wait until reaching the airport before changing their travel money, where less favourable rates of foreign exchange and commission fees are typically levied by bureaux de change.

Research from the Post Office also shows that while spending is down, UK holidaymakers are set to spend £3bn on their credit cards while abroad before the end of 2010. However, the research found that some 4.8 million travel credit card users are likely to face extra charges imposed by credit card companies for using travel credit cards overseas.

Of all UK holidaymakers who plan to use their travel credit cards abroad, almost half (42 per cent) admitted to being unaware as to what it would cost them. When asked why they would be using their travel credit cards while on holiday the research found that 300,000 people claim to use their card abroad because they will have no extra money left after paying for the holiday itself. A quarter of those planning to spend on a travel credit card while abroad will do so in order to top up their spending money after they have used all their cash, and 15 per cent will use their travel credit card to spend more while they are away and then pay it off at a later date.

The Post Office reminds UK holidaymakers that using travel credit cards for spending overseas can sometimes prove expensive as many providers typically charge additional fees for both purchases and cash withdrawals when using travel credit cards abroad.

In order to avoid these charges, the Post Office is advising travellers to shop around for the best deal on their travel credit cards before they depart. Unlike many other providers who charge travel credit card fees, the Post Office offers its travel credit card holders 0% commission on overseas purchases.

Martin Lewis’ top five travel money tips are:

1. Use the right credit card: Most cards add a 3% cost to the exchange rates banks themselves get, yet a few specialist cards don't add this 'load', meaning you get perfect exchange rates beating even the best bureau. Pocket one just for spending overseas, though always repay in full to avoid interest. Take a look at prepaid cards if you don’t have a decent credit score.
2. Never change money at the airport: Airports and ferry terminals tend to give the worst rates, as you’re a captive customer. If you must get it from the airport, pre-order for pick-up to get a better rate (usually possible until four hours beforehand). Better still useLewis’ TravelMoneyMax.com comparison site to find the best possible deal including all fees and any commission.
3. Debit cards can be the worst way to spend: While specialist credit cards give good rates, most don't. And while any card which charges you interest is a bad deal, some debit cards (bank account cards) actually have the worst fees – as they add up to £1.50 every time you spend. These include Lloyds TSB, Halifax, RBS, Intelligent Finance, Santander & NatWest. Don’t spend on these abroad.
4. If they ask ‘Want to pay in Pounds or Euros?’, say ‘Euros’: If you’re paying on a credit or debit card and an overseas retailer offers to let you pay in pounds, reject it. It's called dynamic currency exchange and means the shop does the conversion, usually at a worse rate than your own card.
5. Beware how you pay for foreign exchange: While Lewis’ TravelMoneyMax.com comparison site will give you the best rates, there’s another possible hidden charge at bureau de change. All credit cards and some debit cards, including Barclays, Lloyds TSB, Natwest, Santander & RBS, charge a cash withdrawal fee. Use a different card if possible or withdraw pounds on your debit card and pay with that.

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