Travel Finances |
|
Your Money > Travel Finances Articles > Will the strong...
|
|
By Sarah Modlock
While the boom in the dollar exchange rate continues, holidaying closer to home this summer will mean you will suffer the rising costs of the euro. The pound has touched an all-time low against the euro which is now worth 80p. The recent success of the euro can be explained by the falling dollar, which has made the European currency more attractive for many people. Business people - including the Brazilian supermodel Gisele Bündchen - and even drug smugglers, have started to insist on being paid in euros to avoid the sliding value of the dollar. Interest rate cuts by the US Federal Reserve and Bank of England have also prompted investors to switch to other currencies which have a higher rate of return. So what does this mean if you are one of the four million Brits off to one of the 15 eurozone countries? Well your pound will not buy as many euros and so everything in Europe will be more expensive for you. Last year £100 bought €139, according to the tourist rate from the Post Office. It is some 18% more than the figure of €118 today - the lowest figure since the currency was introduced nine years ago. Then it was worth 71p and dropped to 57p at its all-time low in 2000. The rise in holiday costs comes at the worst time, when prices are soaring at home for everything from mortgages to milk. Research by the Post Office found that the price of a bottle of beer from a bar in Spain is up by around 22% to £2.19. A cup of coffee in France is up 17.5% to £1.68, and a meal for two has soared by the same figure to just over £46. The currency shift means a bottle of wine in Italy is up by some 84p to £5.64. .
What the Pound Buys Abroad
Source: Post Office Experts now predict that holiday bookings over the coming weeks will shift away from eurozone countries to alternative destinations such as Turkey, eastern Europe, north Africa and the United States. Others may decide to holiday at home this year and take their chances with the weather and our own rising cost of living. The Post Office's head of travel Helen Warburton says "We have already seen a 15% increase in our currency sales for Turkey, which indicates people are looking for destinations where their holiday money will go further. Other options include eastern Europe, particularly Bulgaria and Hungary." How to off-set costly currency You may have to pay more for your hotel and shopping but you could save by avoiding tourist spots and eating where the locals are. It's also likely to give you a more authentic experience. It will also pay to organise your holiday money well in advance so that you can get the best deals. Foreign currency....waiting until you get to the airport to buy your currency is the most expensive option. Look at offers in the high street, and from currency specialists such as Travelex. You will probably find even better rates if you buy online and collect your cash at the airport or port. You could save more than £5 for every £100 you take out by planning ahead. Some high street banks, building societies and travel agents plus the Post Office, Marks and Spencer and Lloyds TSB all sell commission-free foreign currency. Of course you will still need to compare exchange rates. When you're getting quotes, ask for them to include all commission charges and any other fees (there are often transaction fees). Don't forget that paying by debit card may mean your bank charges you so avoid this by withdrawing money at a cashpoint just before you collect your currency. Credit and debit cards...they may be convenient and safer than carrying cash but expect to pay a charge every time you use them. The fee for making purchases via a different currency is called an 'exchange rate loading fee' and will cost around 2.75%. It's also worth checking whether your card issuer also charges a 'purchase transaction fee' on top of the loading fee. This is usually around £1.50 and applies to all purchases and so avoid using your card for lots of small purchases if this will affect you. Better still, use cash. But the fees don't end there. If you withdraw cash then most debit cards will slap on an extra charge of 1.5% for debit cards and 2.5% for credit cards. The real answer is to switch your card to one that doesn't pile up charges when used abroad. Notable exceptions are cards from Nationwide and the Post Office and for over-50s, the Saga card (although the latter does make charges outside the EU). Travellers cheques...you may think they are old fashioned but travellers cheques can still be very useful if you don't want to carry a large amount of cash. They cannot be beaten for security but if you are heading off the beaten track, make sure you will be able to change them. Cheques can usually be stopped or replaced within 24 hours if they are lost or stolen, whereas credit cards can take much longer. But you must keep a separate note of serial numbers to take advantage of this security feature. When you buy cheques, read the accompanying security advice and make a note of any numbers you need to call in the event that you lose cheques or have them stolen. Bear in mind that they may not be the cheapest option; commission charges, both when you buy them and use them. Exchange rates can also vary wildly. Portugal and Spain are known to charge high commission fees for changing euro cheques - sometimes as much as 8%. Some Spanish banks require a 15 euro flat fee. Pre-paid cards...relatively new to the travel money scene, these allow you to load up as much cash as you think you will need and then use it to make purchases and withdraw money from ATMs. Watch out for charges though - in this case it could be an initial fee of around £10 when you sign up for the card. Useful links: |
| ||||||||||||||||||