Taking money abroad1

Most of us at some time will be involved in foreign exchange transactions even if it is simply for spending money for holidays abroad. For many people, because handling foreign money is something they do only occasionally, it can appear daunting. The British Bankers' Association has produced this guide to help explain some of the terms used and options available.

Should I take foreign money, travellers cheques or plastic cards on holiday abroad?
Probably all three. As a general rule, some cash is needed for sundry purposes such as food, drink and local travel as soon as you arrive. If you intend to buy expensive items, or are staying for more than just a couple of days, travellers cheques are a safe way of taking money with you. They can be cashed at banks, hotels and bureaux de change. If they are lost or stolen, you can claim from the issuer. Credit cards and increasingly debit cards are accepted abroad, but check with your bank before you go. Acceptability varies from country to country and from region to region.

Should I take sterling travellers cheques or currency travellers cheques on holiday?
It depends on your destination. In most large towns and cities, sterling travellers cheques will be willingly accepted, but in some rural areas which may be away from the main tourist track, they be unwilling to do so. If you are travelling to the USA or some other countries, it may be advisable to take US dollar travellers cheques. Ask your bank or travel agent for advice.

What is the cheapest way to take money on holiday?
Again, it depends on your spending pattern. There will undoubtedly be a cost in converting sterling to a foreign currency whether this is done in the UK or abroad, but unused sterling travellers cheques can be paid back into your bank account or exchanged for cash when you return at no extra charge. Foreign money and foreign currency travellers cheques may attract a higher rate of commission when you buy them and further commission may be charged on any unused cheques or foreign money when you want to convert them back to sterling. There will also be a potential loss (or gain) on the difference in exchange rates. Local currency can often be drawn from cash machines abroad using your debit card or credit card, but if you use your credit card this will probably be counted as a cash withdrawal and attract a charge accordingly. There may also be a handling charge made.

How much do I take to spend?
This will depend entirely on how much you want to buy - and how much you can afford! Don't forget to allow for souvenirs, presents, meals out, snacks, drinks and excursions.

Where do I buy my travellers cheques and foreign currency?
A bank, a bureau de change or sometimes your building society or a travel agent. Shop around for the best deal.

Where do I exchange my travellers cheques when I'm abroad?
Bureaux de change, banks, hotels, shops, but do compare exchange rates and commission charged.

Which will offer the best exchange rate: banks, bureaux de change, shops or hotels?
This can vary. Shop around for the best deal.

Why can't I just cash my own cheque abroad?
Many banks abroad, particularly in the more popular tourist areas, will cash your own cheque if it is supported by a valid cheque guarantee card. You may however be charged a higher commission by the bank cashing it. Check with your bank before you go, but we would recommend that you take currency, travellers cheques or a credit or debit card as well.

What about Eurocheques?
These have now been withdrawn.

The exchange rate I'm offered when I buy (or sell) foreign currency isn't the same as the one published in the daily press. Why?
Exchange rates are continually fluctuating according to wholesale market movements. There is no ‘official' rate of exchange for any particular currency and different organisations will offer different rates for handling travellers cheques and currency.

Make sure you check on the total cost of the transaction though - you may find that an attractive exchange rate is offset by higher commission charges.

If I use my credit card abroad the transaction often takes quite a long time to reach my account. Is there a danger of getting a worse exchange rate that the day I used my card?
Your credit card company will use the rate applicable on the day they receive the transaction from abroad. This will often be different to the exchange rate on the day you used your card. The rate could be better or worse depending on market movements.

If I have any foreign currency or travellers cheques left when I return to the UK, what do I do?
While there is nothing to stop you holding on to them until the next time you travel, most people would prefer to change foreign currency back into sterling. Try to have only paper money left over, as many banks and bureaux de change will either not accept coin or will offer a very poor exchange rate for it. The money will be converted at the exchange rate applicable to that day and could be worse (or better) than the rate when you bought it.

You may be charged for exchanging your foreign currency back into sterling, although some banks may waive this if you bought the currency from them and still have your original receipt.

For further information on how to prepare your trip abroad, please see "Know before you go", a service by the Foreign & Commonwealth Office (a link is shown below).

Related Links

Know before you go - Foreign and Commonwealth Office