Holidaymakers who are heading overseas this summer may be facing their most expensive trip in years.
The pound has now dropped to a six-month low against the euro and a two-year low against the dollar. And rates are likely to remain uncertain amid political and economic uncertainty.
It means it has never been more vital to plan ahead and ensure you get a good deal on your spending money before you go.
Holiday headache: The pound has now dropped to a six-month low against the euro and a two-year low against the dollar
This year, the surprise destination for the best foreign currency deals are department stores and supermarkets.
Exclusive figures reveal that sales of foreign currency at John Lewis have risen by 600 per cent in the past five years — jumping 70 per cent in the past 12 months alone.
And it’s not surprising when you look at the rates and perks on offer.
John Lewis is currently offering the most competitive deal with €1.100 to the £1. So £1,000 would get you €1,100. It is also the most competitive on US dollars, offering $1,238 in return for £1,000.
By comparison, Barclays is offering customers only €1,049 and $1,190 – a €51 and $48 difference respectively, which could pay for a meal out.
At HSBC you’d only get slightly more at €1,061 and $1,195, while at RBS you’d get €1,062 and $1,200.
One reason John Lewis consistently offers the best rates is its price match promise on foreign currency (although this promise excludes online dealers).
The department store waives cash advance fees for Partnership credit card customers — you usually have to pay a fee of around 3 per cent when you use your credit card to buy holiday money. That’s £30 on £1,000 worth of currency.
Customers can reserve a rate online and collect their money the same day from a handful of stores in the UK, or the next day from any John Lewis or Waitrose.
Be aware that John Lewis does not appear on comparison websites that list the best currency deals.
Debenhams also offers preferential rates for Debenhams credit card customers. If you exchange £1,000 you would get €1,094 or $1,231.
If you buy more than £50 of travel money, you also get a £5 voucher to use when you spend £20 in store.
And if you bring back unused currency, you can get 20 per cent extra if you choose to have it loaded on to a Debenhams Gift Card. So if you have $50 left over currency you can convert it to £36 in cash, or £44 on a gift card.
M arks & Spencer also offers its cardholders preferential rates: for £1,000 you would get €1,091 or $1,229. There is also no cash advance fee if you use your M&S credit card to buy travel money from the store.
Supermarkets are also competitive and becoming more popular.
Sainsbury’s last preliminary results in May 2019 reported that income from its travel money offering had increased by 14 per cent.
There are now more than 250 travel money bureaux in Sainsbury’s stores.
Sainsbury’s Bank offers its Nectar card holders a better rate, with £1,000 currently buying €1,092, compared to €1,090 for those without one. Or for dollars, $1,229 compared to $1,226.
You will also earn ten Nectar points for each full £100 of foreign currency you buy in store and five points for each £100 ordered online or by phone.
At a Tesco bureau £1,000 would buy you €1,091 or $1,228.
Like John Lewis, the supermarket offers a price match — though only with competitors within three miles of a bureau.
This year, the surprise destination for the best foreign currency deals are department stores and supermarkets
Tesco Bank customers can now buy currency direct from the Tesco Bank Android App, and collect euros and dollars in-store the next day.
Tesco also waives any cash advance fees for Tesco credit card customers who use their card to buy currency from them. They can buy travel money in more than 360 shops and collect travel money ordered online from more than 580 shops.
Asda also price matches within a five-mile radius. Currently, £1,000 would buy you €1,092 or $1,229. It is also offering £5 off when you spend £300 or more on foreign currency until September 30.
According to YouGov, the Post Office — where today £1,000 would buy you €1,091 or $1,228 — holds the biggest market share for foreign exchange at 25 per cent.
This compares with 12 per cent for Tesco, 9 per cent for M&S, 8 per cent for Sainsbury’s and 4 per cent for Asda. YouGov does not hold figures for John Lewis.
Whatever you do, always buy your currency in advance, as airport travel money desks are notoriously expensive.
Andrew Hagger of website Moneycomms, says: ‘It’s encouraging that sales of currency bought in advance are on the up.
‘But I still see people queuing at airport foreign exchange desks. They’re getting terrible rates.’
An investigation by online currency provider FairFX found the average rate at airports was 15 per cent below the market rate.
It revealed airport bureau de change are paying an average rate of less than one euro per pound.
Worse still, there are a growing number of currency teller machines at airports for those running out of time. Some offer the equivalent exchange rate of a pitiful €0.82 to £1.
If you order holiday cash online, remember to factor in any delivery costs, though most will deliver for free if you buy £500 or more.
The Halifax Clarity Card is currently one of the top credit cards for overseas spending.
There are no fees for spending anywhere in the world and you can make free cash withdrawals.
Alternatively, you can load a pre-paid card. Try WeSwap or FairFX for competitive exchange rates.
You can use these cards abroad like a debit card without transaction fees on each purchase and get free ATM withdrawals.
The card is free, and there are no fees to reload cash — which is typically done online or via a mobile phone app.
Finally, always pay in the local currency while away. If you choose to pay in pounds, the rate of exchange is dictated by the retailer’s bank, which routinely offers poor value.
THIS IS MONEY’S FIVE OF THE BEST HOLIDAY MONEY DEALS
Halifax’s Clarity Credit Card charges no fees on overseas purchases and withdrawals – but remember interest will be applied immediately, so make sure to pay off holiday spends quickly. 18.9% APR.
The American Express Premium Plus Credit Card offers a 25,000 free Avios boost when you spend £3,000 in the first three months. Plus its pays 1.5 Avios per £1 spent on the card. It carries a £195 annual fee. 76% APR.
Tandem Bank offers fee-free overseas spending and cash withdrawals plus it pays 0.5% cashback on all spending at home and abroad. Standard interest is set at 18.9% APR. The card is managed via a smartphone app only
FairFX is offering This is Money readers a free prepaid Mastercard currency exchange card. It offers highly competitive exchange rates, no foreign transaction fees and low cash withdrawal charges abroad. It also comes with a £10 bonus when you top up.
Virgin Money’s Virgin Atlantic Reward+ card offers up to 30,000 miles: 15,000 if you make a purchase within the first 90 days, plus another 15,000 if you apply before 30 June 2019 and spend £3,000 in that 90 days. Interest on purchases is 22.9% and it carries an annual £160 fee.