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Travelling abroad is something many people look forward to over Christmas, and while money is often a worry, it is more so than ever for winter holidaymakers. Getting the best exchange rate is usually the main focus of cost-effective travel money, though according to a finance expert, there’s more to consider if you want to avoid overpaying. Two financial market experts at Conotoxia have shared the best and worst ways to pay outside of the UK.

Travel money is often an afterthought for travellers, frequently left until the day before – or the day of departure. While this is a feasible way to ensure you have cash for your destination country, Robert Blaszczyk, head of the strategic client’s department at Conotoxia has warned against it.

He explained that airport currency exchange and debit card transactions are the “least cost-effective ways to pay abroad” for several reasons.

Bartosz Sawicki, a market analyst at Conotoxia said: “Land-based exchange offices very often offer unfavourable exchange rates. The more popular the location, the greater the difference between the currency’s purchase and sale price. Anyone who has tried to exchange currency at least once for example in Prague’s Old Town has learned this.”

The financial expert added that settling international finances in your own currency is “rather dubious”, and that the exchange rate offered by the bank is often “much higher” in such cases.

If you have some time before travelling, there are plenty of money-saving alternatives available to choose from, including purchasing cash currency in several instalments or using a multicurrency card.

Buy currency in instalments

Though it will take some planning, buying currency over time rather than all at once is beneficial for several reasons. According to the experts at Conotoxia, one advantage is that it allows you to average the purchase rate, and limit the impact of sudden currency quotation changes – which is particularly useful in the current economic climate.

Secondly, it means you don’t need a lump sum of spending money and can save as you go instead. You will however need to keep an eye on exchange rates to ensure you purchase currency at the best time.

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Use a multi-currency card

If you prefer paying by card while travelling abroad, switch your debit or credit card for a multi-currency version.

You will need to purchase this front before loading up the balance, though it cuts out the need for an online service or bank account in your destination country’s currency.

Bartosz said: “This is currently one of the most advantageous ways to pay abroad. Using a multi-currency card, users avoid currency conversion fees and gain free access to dozens of currency accounts between which they can exchange currency and pay with funds worldwide at any time.”

According to Which, prepaid multi-currency cards allow you to lock in rates by converting when you load the cash or store some money in pounds to convert later.

While cashless payments are extremely popular in the UK, the Conotoxia experts noted that the habits of foreign payers may be “quite different”.

They explained: “Although card transactions are common almost everywhere, you may come across places where you pay cash during your travels abroad.”

However, Robert noted that relying on card payments wherever possible “is a good idea” as they are “safer” than carrying notes or coins around.

If you are faced with cash-only payments and you’re relying on a card to finance them, Robert recommended taking advantage of free ATM withdrawals.

When it comes to using ATMs abroad, Bartosz explained that there are a few things to look out for before withdrawing cash.

Though most multi-currency cardholders can access their money with no additional fees, some operators may charge their own commissions or process transactions at their rate.

This means that when a UK tourist withdraws euros in a country with a common currency, the ATM may offer to settle the transaction in pounds (GBP), using its own exchange rate.

Market analyst Bartosz warned: “Such a rate is almost always significantly less favourable than that offered by multi-currency platforms.”

He added that to avoid this, you should always pay close attention to the messages displayed on the screen and decline the dynamic currency conversion (DCC) service.

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