How to get the best exchange rates when buying travel money

Getting the best exchange rate involves a little bit of research, and shopping around to find the highest return. Take a look at all your options before you take the plunge, as you could just end up with a little more spending money in your wallet for your trip and who doesn’t want that?

Alice Morgan
Alice Morgan
Updated 25 August 2022  | 3 mins read

Key points

  • Airports usually offer the worst exchange rates so avoid leaving it until the last minute
  • Look at a few different options before deciding where to exchange your money
  • You may want to consider a travel credit card instead

Where to buy foreign currency before you go

Exchanging your money can sometimes fall to the bottom of your to-do list when planning your holiday, and it can be tempting to leave getting your foreign currency until the last minute, but this doesn’t often give you the best deal.

Airports usually charge you more to exchange your money, so you won’t walk away with as much spending money as you would if you bought it elsewhere.

Instead, try your local Post Office, travel agent or a specialist currency exchange provider. It’s worth shopping around and comparing the exchange rates on offer before you buy.

What is the cheapest way to buy foreign currency?

Providers change their prices all the time to draw in customers, so it’s worth keeping an eye on a few different options.

The cheapest way is often online, due to companies having lower overheads, but bear in mind you’ll then need to pay delivery charges.

See which option gives you the best exchange rate, low commission fees, and low delivery costs - whether that’s online, in your local bureau, or via a high street store like Marks & Spencer.

Best credit cards to use abroad

Instead of taking pockets full of cash with you, consider using a travel credit card.

This isn’t a standard credit card, which could see you facing hefty charges for using it abroad, but one that’s specifically for using while on holiday. They either charge a small fee or none at all for transactions outside the UK.

They may give you a better rate than you’ll find exchanging your cash, but it’s still important to work out the total cost taking into account any interest, plus any fees, to see whether it’s the cheapest option for you.

It’s worth remembering that if you use a travel credit card abroad, you could spread the cost of any payments you make and any purchases over £100 will be protected by section 75 of the Consumer Credit Act.

Just be aware that if you’re withdrawing money at an ATM using your credit card while you’re abroad, you’ll likely be charged a fee for doing so.

A prepaid card could also be an option to think about. You top up your prepaid card with money before you leave, and then use it while you’re away. It’s possible to add more money to the card when you’re on holiday too.

When you load your card with money to spend, you’ll get the exchange rate on that day, rather than the day you actually use the card, so you’ll know exactly how much bang you’re getting for your buck. The exchange rate is set by the card provider, so it’s not always the most competitive, but it’s definitely worth a look.

Much like a debit or credit card, if you lose your prepaid card while you’re on your trip, you can call your provider and they’ll block it for you, so you know your money’s safe. You can exchange any money you haven’t spent back to pounds and transfer it to your bank account when you arrive in the UK.

Just keep in mind that some places might not accept prepaid cards, for example, a car hire firm, so you’ll need to do your research before you travel.

Tips for spending money abroad

If you want to try and save some money on your travels, here are some top tips on how to keep costs down:

  1. Always pay in local currency

    Paying in pounds sterling while abroad will almost always give you the worst deal. Whether it’s in cash or on a card, always opt to pay in the local currency

  2. Never take cash out abroad, if you can help it

    Taking cash out abroad can lead to hefty fines from your bank or building society

  3. Check whether your credit or debit card provider charges you for overseas transactions

    If they do, it might be wiser to take cash with you or find a travel credit card

  4. See whether a travel credit card or prepaid card could be a better option for you

    You may get a better exchange rate and it can be more convenient

  5. Don’t use a credit card to exchange cash

    You could end up paying steep fees for doing so

  6. Exchange on your return

    If you come home with any foreign currency left over, see if you can use a buy-back scheme to transfer it back to pounds