JOHN BURKE, former editor of Global Banking, warns against being out of pocket.

 

This is the time when City analysts, before making for the sunspots or ski-slopes, predict how the New Year is going to shape out on the stock exchange and in other markets.  The forecasts cover everything from the value of sterling to the level of economic growth and from the cost of borrowing to the rate of inflation.

 

For example, a survey by the Association of Investment Companies sees rising interest-rates, European recovery and BREXIT doldrums, but no opinion on sterling.

This suggests that there is no point in delaying purchases of major currencies, although minor ones like the Turkish lire and South African rand tend to volatility.

The difference of 13 euros between the best and worst rates for £500 today is as much as the fluctuation in December.

 

So the key thing in buying foreign currency is shopping around – even among branches of the same provider, but most of us will not have the opportunity to spot the outlet that, on £1,000 for spending in New York, might give 45 dollars more than at the meanest rival.  In any case, larger amounts fetch better rates.

 

The hassle also involves a trade-off between delay, distance and discounts as well as deadline, delivery and denominations.  There are a dozen outlets for foreign exchange, including chain and department stores, even in smaller cities like Bristol and Brighton.  High Streets in most towns offer a choice of four banks plus the Post Office and the leading two travel agencies.

 

First Choice and Thomas Cook promise to match the best quoted to them, but some department and chain stores are competitive in another way. Besides home delivery (free above a certain amount), they may offer a gift-voucher or else a discount if you have a loyalty card.

 

Whatever you do, try to avoid paying commission or fees or having to re-convert unused currency.  (This last could turn an original £100 into £83.)      Make sure too that you have neither a wad of notes nor a sum in large denominations too large for a taxi or cafe.  Obtain or order your currency some days ahead, and remember that airports are not a good place to change money.

You should not take too much cash, which ought anyway to include enough sterling

for unforeseeable circumstances here before departure and upon return.   In most parts of the world, it is also useful to have some dollar bills in a pocket, so that you do not have to display a purse, wallet or credit-card in the very spots where thieves target tourists such as bars, beaches and bazaars.

 

The obvious means of payment is a credit card, but there remains the same risk of being parted from it.  At least, holding separate cards for home and away provides double security.

 

If the latter is lost in Rome or stolen in Rio without a replacement in time, you can at least continue your routine shopping once back home.  Moreover, if you use the same card not just in the High Street but on holidays too, the issuer’s computer may not flag up unauthorised spending abroad before you realise it is missing.

 

Another disadvantage is losing a valid card in a wall-machine, not least in Turkey,

or being mugged after withdrawing cash. Most cards charge 1% to 3% on foreign  transactions, deducting more on the exchange-rate, yet the option of being billed in sterling is usually a trap.

 

This is why a loaded card for travelling may be better, and it means you can leave a debit card – which charges for purchases abroad – safely at home.  Using cash or your bank account, you put an electronic credit on the card at the day’s exchange-rate, so you are protected against any fall in sterling – and there are safeguards against fraudulent misuse, unless it carries a contactless symbol.

 

Some cards can be loaded jointly with even more than the 13 separate currencies available on the Post Office Travel Money Card which is the best known among a dozen brands because of its almost unrivalled access.  Yet these plastic alternatives do have their disadvantages on top of the usual risk of loss, not least having to register your passport or driving licence on top of other identifying data.   Some are also prone to technological failures such as accepting a password.

 

Then there are bewildering permutations in the fees, charges and penalties of the various issuers, not to mention the period of validity, so you must be clear about budgeting for forward travel, including emergencies.  Watch the balance; beware of being locked in against a recovering pound; and do not put the card away until a following holiday with a huge sum unspent.

 

Pre-paid cards are particularly useful for frequent journeys and across several currency areas besides being a standby in case your other card goes missing or reaches its limit. Yet a limited alternative for the worst case still survives in the form of travellers’ cheques.

 

Visa and Thomas Cook are among the issuers, but the trouble is that few banks and retailers accept them nowadays although American Express ones in dollars are widely accepted in the USA.  They can also be purchased in pounds but not euros, and anything from American Express would still be unwelcome or even useless in 25 minor countries – such as Cuba and Syria.

 

One brand or another can be purchased at most banks as well as the Post-Office, but

some charge 3% in commission and may deduct more for redemptions.  Worse, encashment at foreign banks or hotels may involve a flat fee equivalent to £12+.

 

On the other hand, there is a complete refund on cancelled travellers’ cheques that are less vulnerable to misfortune than plastic money.   Therefore, remember the adage of not having all your eggs in one basket.  Take currencies and cards and cheques, carrying them as separately as possible.   In a future article, I will advise on how best to keep them secure, and also on what to do in an emergency.