In light of the recent collapse of Crown Currency Exchange, Raffick Marday from comparison website Compareprepaid.co.uk, offers his tips on how to save money on foreign currency and avoid unnecessary charges when travelling abroad this year.
Since the 'credit-crunch' first bit we have become almost blind to the collapse, implosion or bankruptcy of various companies, taking little notice in the main: unless of course the collapse happens to affect us directly that is.
The collapse of Crown Currency Exchange a few weeks ago meant that up to 18 million people lost travel currencies they had already paid for in advance. While many travellers will get their money back eventually, that may take a number of months to sort out, leaving most out of pocket at a time when they are looking to travel.
Crown offered travel money that you paid for in advance of travel. Sometimes you paid as far in advance as 9 months ahead of travel to benefit from the best rates. Their rates were attractive; however, the major drawback was that the currency purchased was not secure.
The collapse highlights the risks involved in buying foreign currency in advance.
A far safer option for any traveller looking to avoid losing out on currency purchases is to instead think about buying a travel money card. Fairly new arrivals on the credit scene, travel money cards operate in a similar way to store gift cards: you simply top up the amount of credit you want to add and go from there.
They are also far more secure than purchasing currency in advance for a number of reasons.
Firstly, the credit added to travel money cards is held in segregated accounts and, secondly, most travel money cards are actually issued via Newcastle Building Society, a financially sound 'mutual' Building Society that is far more conservative in terms of risk compared to banks and far less likely to go bankrupt. Building Societies are seen as a safe pair of hands in the financial industry.
Another benefit of travel money cards over travel cash is that you typically get better exchange rates from prepaid travel money cards compared to most foreign exchange bureaus, plus you do not have to pay traditional foreign charges associated with using credit and debit cards abroad either such as withdrawal fees and purchasing fees.
As with all personal finance products however, it is always advisable to compare different travel money cards to find the best deal for your individual travel plans and financial circumstances.
There are great new cards on the market now that are easy to buy and top-up, leaving you in complete control of exactly how much you are spending, too, so you don't have to face any nasty credit card surprises on your bill when you come home.