The cheapest travel money ever!

We compare how much travel money will cost using the cheapest debit and credit cards, online exchanges and currency cards, and show you that Travelex ain't that cheap!

When deciding on travel money, you need to look at the exchange rate you'll get, delivery charges, transaction charges, compulsory insurance charges and commission.

Below are options that will give you per £1,000, €1,090 to €1,150, and $1,560 to $1,640. Each option has an 'Overall rank' for euros. All tables in this article include commission and charges, where applicable.

Debit and credit cards

Most debit and credit cards are too expensive. However, two providers offer the cheapest way to pay overseas bar none. Here they are:

Debit and credit cards per £1,000

SAR = South African Rand

Nationwide's debit card is the best for both euro and dollar purchases. No other card comes close. This card also appears to be creditably cheap for withdrawals, but these figures reflect a best-case scenario, as I'll soon explain.

Making purchases overseas

Not only do these cards offer the best purchase rates, but they'll consistently be the best. Nationwide and SAGA both use VISA's exchange rate. This isn't an interbank rate but it's pretty close and it's the best spot rate (immediate price) that we can get. All other card providers using VISA use their own exchange rate and/or add on a very large percentage-based charge.

When making purchases with cards overseas, some merchants will present you with a card machine telling you the pound amount, but tell them you want to pay in the local currency because it's much cheaper.

Making withdrawals overseas

When making withdrawals, the bank you make the withdrawal from will likely charge you a hefty fee. In my tables I've assumed a 1.5% charge, but it might be twice that. Even with that charge, Nationwide's debit card will often be far better for withdrawals than getting currency from your bank.

Both credit cards are terrible value for withdrawals. (Other credit cards are worse!) Also, what's not accounted for in the table is that interest will be charged on withdrawals from day one. £1,000 would cost you an extra £4 or so for every week that it remains on your card.

Online currency

You'll most likely need some cash while you're away as well as spending on a card. So, the next cheapest way to get currency is online. Here is a comparison of online rates:

Online rates per £1,000

Guarantees

Interchange FX guarantees to beat the best online price and it does for euros and dollars, being the third cheapest behind using the SAGA and Nationwide cards for purchases. Thomas Exchange Global beats it for rands, even with delivery and other charges. Travelex guarantees to refund the difference, but I think that guarantee's very limited, and its hard to meet its terms and conditions. (For example, it probably won't let you claim against Interchange's rates, because it would argue that it's a postal provider, not an internet one.)

Currency cards

Pre-paid cards are said to be safer than cash. They're often touted to parents whose children are travelling. Many providers send travellers replacement cards within 24 hours or you could leave a back-up in the hotel safe.

Here are tables for purchases and withdrawals:

Currency cards per £1,000 - purchases

When used for purchases, the Caxton FX's card has fair euro and dollar rates, and Travelex has a great rate on the rand at present.

Currency cards per £1,000 - ATM use

I've made the same assumptions as I did earlier, which means withdrawal rates could be a hell of a lot worse. The Caxton FX card makes no charge for withdrawals. Travelex makes no charge for withdrawals, but its resellers can, so it's best to get the card direct from Travelex.

Other charges

You can get a second card free from ICE and there's no account-closure fee. Travelex's second card is free. There's a monthly inactivity fee ($3.50/€3/R35) if you don't use it for 12 months, but if the card is empty there's no charge. I tried to call Travelex to find out what it costs to get your money back in pounds, but got no answer. Caxton FX charges €7.50/$10 for second cards and €2/$3 to close the account.

These cards are normally expensive, but it depends how much you're willing to pay for extra safety and convenience.

South African rands

I've been comparing rands to show that many providers grab headlines by offering deals on major currencies like euros, but are expensive with smaller currencies. Of all the options compared in this article, Travelex's Cash Passport had, at the time I collected the data, the best deal on rands. However, Nationwide's and SAGA's cards (used for purchases) are likely to offer the most consistent value in any currency.

The dregs

Bureaux de change, particularly at airports (including Travelex) are very expensive. Perhaps one high-street bureau in, I don't know, 1,000, can surprise. The ones with good rates typically have big online businesses, such as Interchange.

The remaining alternatives are almost always expensive. Banks are the worst, followed by travel agents, the Post Office and Marks & Spencer.

All exchange rates are correct as of 22 August 2009.

Compare travel insurance through lovemoney.com

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