Should we buy euros for the summer now?
The pound is hovering near the psychological €1.40 barrier – some days it’s higher, some days not – but it’s the best rate since 2007. So our Money Saving Expert Martin Lewis is here to answer the question on everyone’s lips: Should I buy euros for the summer now, and what’s the best way to do so?
So what’s happened to the pound? And why’s it so strong?
Actually it’s not – this is more of a 'weak euro' story than a 'strong pound' one. If you look at the pound against other currencies for example, the dollar is currently around $1.47 when last summer it was around $1.70.
The euro has been getting continually weaker over the last few months, with increasing worries about deflation and low interest rates in the euro economy. This would've been unthinkable this time last year when you'd have done well to get €1.20 and two years ago when €1.15 would've been worth whooping about.
Yet the weak euro is a boon for British holiday makers to the Eurozone (Spain, France, Greece and the rest, but of course not Turkey), directly reducing the cost of fuel, eating out, day trips and more once there, and indirectly reducing the cost of hotels, car hire and more.
Should I be scooping up euros now?
It’s no surprise that my Twitter feed has been jammed with tweets similar to this:
"I can get nearly €1.40 for my pounds now, should I be scooping this up as a bargain?"
So let me be blunt. I don't know. Nor does anyone else. Currencies move – it could get better or worse or stay the same. Even professional currency speculators don't always get it right. Many commentators were saying to buy a few weeks ago when the euro was at €1.38, but it’s gone up and down since then – and had you listened, you’d have lost out compared to the best price seen since.
It is worth noting markets do work on psychology, so breaching the €1.40 barrier could see the rate continue to rise, yet that's still a crystal ball job.Forget predicting the markets and ask yourself what a good rate is
It's worth taking a step back from the daily movements of the market though and looking at the big picture. The euro rate for people in the UK right now is very good compared to the past few years, and would certainly mean your holiday spending will go much further than in recent years.
So it is a legitimate decision to say "I want to bag the certainty of getting €1.40 right now as that'll be decent for my holiday".
If you do decide to go for it, then do it with the mindset that you won't worry if the euro gets even weaker, you're happy with the price you're getting. This is all about whether the upside of 'certainty' outweighs the risk that you'll look back with hindsight and say "I should've waited." Of course if the euro rate drops and you've locked in, you're on a winner. Going anywhere soon, or want to lock in a euro rate?
If you are going imminently, want cash, or want to lock in the euro rate, there are two easy ways to do it.
a) Top prepaid cards. Here, you load the card with cash before you travel, then use it like a debit card. If you lose it, your cash is protected. Unlike top credit cards, you get the rate on the day you load/buy, not spend, so if the pound gets you even more euros afterwards, you lose. If it gets you fewer, you win.
My top pick for euros and dollars is Ukash as it has a good rate and low fees. For other currencies Travelex's prepaid travel card – Cash Passport - comes in euros, US, Australian, New Zealand, and Canadian dollars as well as South African rand.
b) Top cash rate. Use online tools, such as Travel Money Max to compare the top rates at online bureaux de change to make sure you get the best deal. And in the run up to Easter, two bureaux have rate sales; the comparison will be updated when they boost (do compare as these sales don't always win).
· Post Office is boosting online rates until 8am tomorrow (Tuesday 24 March) on euros, US dollars and more.
· Travelex is also boosting rates tomorrow (Tuesday 24 March) on all currencies from 11am-1pm (so you could pre-order and pick up at its airport bureaux).
Or just bag perfect rates whenever you go wherever you go
My personal preference isn't to play the market, it's just to get the best rate whenever I go. This way I'm not speculating one way or the other, just ensuring I get the best value at the time I'm away.
By far the best rates come via spending on a specialist overseas credit card - providing it's repaid IN FULL each month, to avoid interest. Then in every country you get the same near perfect exchange rate banks do - smashing bureaux de change rates. (Normal debit & credit cards add a 3% fee onto this rate).
The top pick card is the Halifax Clarity due to it having the lowest ATM fees. If you fail to repay it in full it’s 12.9% rep APR. Yet theSaga, Post Office Platinum and Nationwide Select (for its current account customers only) also have very good rates, although it’ll cost 11.9% to 17.8% rep APR (depending on the card) if you fail to repay in full.
As with all credit cards, you will need to pass a credit check to get it. Also, with these cards it’s worth noting that it’s cheaper to spend on them than to withdraw cash (as you can pay interest on cash withdrawals even if you clear in full and there is often an ATM fee too).