How to buy foreign currency

I came across this article today while looking for advice, also checked on here and couldn't see any links so thort everyone might like a read, I assume the contents are still up-to-date and I found it very helpfull.

The Web address for the article is below.

http://money.msn.co.uk/MyMoney/Insight/MoneySpinner/ThisWeek/foreigncurrency/default.asp

How to buy foreign currency
By Nic Cicutti, MSN Money Special Correspondent
Last updated January 11 2005

Where to get the best deals on travellers’ cheques, what the best credit cards are to use abroad, and where to change your cash.

You see them all the time at the airport. Late at the check-in, sweating by the time they reach passport control, rushing to the departure gates only minutes before the flight’s final call – yet somehow still managing to find the time to cram in a quick dash round the duty-free shop and the travel money counter.

Come to think of it, that sounds like me. Except that in my case, the visit to the foreign currency desk is one thing I rarely need to do. Despite the hasty last-minute packing and missing sun cream, the one thing I usually manage to sort out before we leave is the money.

The reason is quite simple: by the time you’ve paid for those two or three weeks in the sun, why add a further 5 per cent to your holiday bill by buying currency from the most expensive shop, or taking the wrong sort of plastic with you when you go abroad?

So how do you go about trying to get the best deal on your foreign money? Here are a few easy steps.

Decide what you need
In part, this depends on where you are travelling.

Despite the growing availability of Visa and MasterCard outlets throughout the world, plus cashpoint machines in virtually every urban area, there are still places where plastic is not accepted or where travellers’ cheques won’t go down well, and only hard cash will do.

MyTravel, a holiday operator, has a useful tool on its website which tells you what the most commonly-accepted currencies are in a particular country.
Most of the information is as you might expect: in Spain, they accept the euro. But in Romania, the site advises, they don’t much like travellers’ cheques – indeed, I discovered this last year. They prefer cash.
In Estonia, they will accept sterling travellers’ cheques, but Ethiopia prefers the US dollar, especially as hard currency. Egypt has a limit of 1,000 Egyptian pounds on the amount of its own cash you can bring into the country.

For more information, go to the MyTravel website

Travellers’ cheques
Travellers’ cheques are also worth taking if you are going off the beaten track, for their security features as much as anything else.
American Express, one of the world’s largest providers of travellers’ cheques, points out that every 36 seconds, a British traveller abroad is a victim of theft.

If lost or stolen, travellers’ cheques can be replaced with a single telephone call - usually within 24 hours. Additionally, American Express now also provides help with getting a stolen or lost passport re-issued.

However, it can often be difficult to cash them in remote places. Nowadays, aside from the issue of security, you can probably manage without them quite easily if you are going to a major resort.

Even so, dollar cheques are sometimes useful in the US, where they are widely accepted as payment for goods and services.

This is helpful to know: some banks in the US levy heavy charges to convert travellers’ cheques into hard currency. Similarly, some European banks will charge up to 6 per cent commission.

It’s also worth noting that while some overseas currency exchange outlets don't charge for the service, they do offer a lower rate of exchange.
When it comes to buying travellers' cheques, most banks and building societies charge 1 per cent, although some, such as the Co-op bank and NatWest, have a minimum charge of £4.

Tesco and Nationwide are the best bet for travellers' cheques: both charge a big fat zero for non-sterling cheques.

More details of Tesco’s deals are available here
Ideally, you should try and buy your cheques from a retailer who will cash any unused cheques free of charge. If you buy them from your bank, check if you can pay them back into your account for free.


Cash
Most of us will want to exchange a significant chunk of our spending money before travelling abroad.

Whatever you do, try to avoid airport concessions. Not only do they charge up to 3 per cent on each transaction – sometimes with a minimum charge of £3 - they also offer scandalously low exchange rates.
Indeed, a survey last year found that some companies charged varying amounts around the country. This includes both Travelex and Thomas Cook (now owned by Travelex), as well as International Currency Exchange, another currency dealer.

The suggestion is clearly that some companies fix rates according to what they think the market can take in different areas, although Travelex says price variations around the country reflect different costs it has to pay. For example, at Heathrow, rates are partly determined by what it has to pay its landlord, the British Airports Authority.

As for banks, forget about them too: unless you are a customer you will have to pay a minimum charge. Again, the rate you are offered won’t usually be very attractive either.

So where should you go? Well, I’m going to assume that you don’t want to be bothered by a top 10 comparison table that goes into minute detail on every rate. Too boring. As long as you get virtually the best deal you are probably not bothered by a couple of pounds on a transaction worth £500.
Thankfully, for many years a colleague with whom I worked would carry out a survey every year of companies offering the best deals, taking into account exchange rates, commissions and the chance to change back currency on return from a holiday without paying further fees.

Every year his slightly manic efforts tended to produce the same results. Among the best three or four exchange rate deals, without fail, were Marks & Spencer and the Post Office, simple as that.
You can either order over the counter at Post Offices or click on the link below and order your money online:

Royal Mail

As for M&S, click on the link below to buy online. Alternatively, you can also buy currency at some of its branches – the website has the locations.

Marks & Spencer

Credit and debit cards
Despite grandiose claims from each of them about the quality of their services, Visa and MasterCard are much-of-a-muchness.
But note: the majority of credit card issuers impose a foreign usage loading of around 2.75 per cent for using the card abroad, and charge 1.5 to 2 per cent for withdrawing cash overseas. In addition, some levy interest immediately on the amount withdrawn.

For example, Barclaycard charges a 1.5 per cent (minimum £1.50) fee for cash withdrawals and a 2.75 per cent "loading" charge. This charge is added when the currency is converted back into sterling.
If your bank account can stand it, use a debit card.
Debit card holders should look for the Cirrus or Maestro sign in the case of Switch, or the Visa sign for Delta. If you have a Switch or Delta card you can use it in most foreign countries to withdraw money directly from cash machines.

Check on your card for a Cirrus or Maestro logo. You receive your money at the bank's exchange rate, and you are charged around £1.20 every time you withdraw money (so you can withdraw a large amount all at once to save on this charge).

The best cards
The cheapest cards to use abroad are Liverpool Victoria and Nationwide’s Visa cards. Unlike their rivals, neither of them charge foreign loading on purchases in Europe and Liverpool Victoria charges just 1 per cent elsewhere, while Nationwide charges nothing. On cash withdrawals, Nationwide charges 1 per cent, while Liverpool Victoria charges 1.5 per cent.

Debit cards can be even cheaper. A Barclays customer making purchases worth £500 with their debit card while abroad would see a charge of £13.75 on their statement. For a Nationwide member, the cost would be £0.
If these same customers withdrew £500 from an ATM abroad, the Barclays customer would see a charge of £21.25 on their statement and the Nationwide member would be charged £0.

However, you first need to open a Flexaccount in any branch of the Nationwide.

That’s it! If you are in one of the UK’s departure lounges this summer and see a somewhat dishevelled individual running round the duty-free shop with a quart of gin and a tub of factor 15 under his arm, there is a decent chance that it will be me.

And the gin is purely for medicinal purposes, you understand.