MARTIN Lewis has warned holidaymakers about five simple mistakes to stop wasting money while traveling abroad.
The money guru returned to the Martin Lewis Money Show to reveal how holidaymakers can avoid paying extra charges and save money.
When traveling abroad, most tourists tend to pay in pounds as it seems to be the obvious choice.
However, choosing this option may result in you paying more when inserting your card into a foreign machine.
This is because the foreign bank will convert to pounds and the rates are more unfavorable.
If you choose to pay in the local currency, your card will do the conversion, which is usually much more favorable.
And if you use a specialized travel card you’ll get “almost perfect” change, while those who don’t use the card will likely face 3 percent fees.
Martin warned that you should always choose to pay in local currency when prompted and not select the option to pay in pounds sterling.
He said: “When you pay with plastic abroad, you always pay in foreign currency, not pounds.
“Here’s why: if you pay in pounds, it’s the ATM or overseas store that does the conversion and every time I’ve tried this, and I’ve done it many times, it’s a trouser exchange rate.
The money expert also warned that airports are the worst place to withdraw cash during a trip abroad, simply because airports pay the highest fees.
He said the best place was to compare rates online and then place an order.
“If you just want cash to travel abroad… go to a comparison tool and get the best fares. So for $1,000 you’ll pay less than £800 for the best fares, £810 or more for the highest fares . street.
“Do it at the airport and it could cost you up to £950. If you left it so late you have to do it at the airport, call them and book your money in advance – you’ll get a better rate.”
Martin’s third warning was about using a credit or debit card to get the best exchange rates.
Debit and credit cards typically offer exchange rates for the day you use the card.
However, by using prepaid currency exchange vehicles, you can get the best exchange rates for the day you actually top up.
Martí said: “With prepaid cards, you can choose to get the rates for the day you top up the card.
“So, if you thought euro rates were going to go down, you could lock in today’s exchange rate. And if you thought rates were going to go down further, you could put in 50 percent of money today and 50 percent on another day to get the best exchange rates and spread the risk.
Another warning from Martín was to stop taking out cash to give pocket money to minor children.
While it may seem like the easiest way to give your little ones some cash to spend, you’re actually losing more money when withdrawing money from a foreign ATM.
Martin advised on obtaining prepaid cards for those under 18 years of age.
You can load any amount you want to give to your child and he can spend it without losing any cash.
He said: “Prepaid cards for minors have spending limits – you can set how much you want them to spend and see what they’re spending the money on.
“And almost all of them offer almost perfect exchange rates.”
Martin’s final warning was that visitors should exchange their currency before travel, and not while abroad.
This is because it is better to change the currency while still in the country, simply because you have more options in terms of exchange agencies to choose from and get the best rates.
He said: “What I would normally prefer is to switch to euros before the trip. I would do this through a comparison site.”
Are there other options for spending abroad?
There are several specialized cards that can offer you a great exchange rate.
These cards include travel credit cards and prepaid cards that allow you to pay abroad without fees or with a fixed exchange rate.
Senior consumer reporter Olivia Marshall explains all the options.
Travel credit cards: Travel credit cards let you spend money abroad without paying fees or hidden charges.
However, you may still be charged for withdrawing cash.
We recommend the Halifax Clarity Card as it won’t charge you to use it abroad nor will it charge fees for withdrawing cash.
But you will be charged interest if you don’t pay the balance in full at a rate of 19.9 percent.
And you’ll be charged interest on cash withdrawals until you also pay off your balance, at a rate of between 19.9 and 27.95 percent, depending on your credit score.
In other words, just because you’re using plastic abroad doesn’t mean you don’t have to pay off these credit cards like you normally would.
Always pay off your balance before the end of the month with these cards to ensure that the money you saved is not lost when paying interest.
To learn more about travel credit cards, you can read our guide here.
Prepaid cards: An alternative to carrying cash is to purchase a prepaid card.
These cards allow you to deposit a set amount of cash on the card at a fixed exchange rate.
So if the rate is good right now, you can put money on your card and it will keep that rate when you’re on vacation.
Just keep in mind that these cards can sometimes have hidden costs and fees, so be sure to read the fine print.
