Cash or Card

Jockanory

Despite reading the relevant topics on the forum I'm a little confused(not difficult to be honest) about whether to pay for my holiday hotel by cash or card?
I'm going to Majorca in August and I've booked my holiday hotel direct and have to pay on my arrival.
Would I be better keeping an eye on the exchange rates and buying Euros at a good rate of exchange or apply for something like a Halifax clarity card and pay with that?(do they work just like a credit card and how do they set the exchange rate?).
Thanks

A.Jones

Clarity card is a good option. You pay in Euro at the hotel. Do not let them convert it to GBP. The conversion rate will be the mastercard rate on the day (usually good).

Nobody knows what the exchange rate will do. If you want to get an average rate over the next few months, then what you can do is the following:

1) Get a free FairFX card from here https://www.fairfx.com. Top it up with just 10 Euro. Make sure you get the euro currency one.
2) Every week, top it up by £10 (or work out how much you are likely to spend on holiday, and divide by the number of weeks left before the holiday).
3) Use it like a debit card on holiday, with no fees on shop / restaurant purchases. You can also pay the hotel with it, but only pay the final bill and do not let them use it as a security deposit. You should also pay in Euros if doing this, not GBP. You can use it in ATMs but it will cost you 1.50 Eur per transaction.

Doing it this way is essentially pound cost averaging (like people often use for buying shares and bonds). You will never get the best rate, or the worst rate, but somewhere in between. You will get the average rate over the next few months. Hitting the point where the exchange rate is best is very difficult, as hindsight is useless here. You can of course miss a week if you feel the rate is poor, in the hope that it gets better, but if the rate keeps sliding lower, then you end up with a worse overall rate. Similarly if you think the rate will get worse, you can buy more now to future proof your exchange rate (and kick yourself when it later goes up).

Jockanory

Thanks for the reply I will wait and see what other replies I get before deciding what option is best for me(at present I will probably go for the clarity card).