Martin Lewis: Should you buy your holiday euros/dollars now or wait?

How is the pound going to move in the next few months?

Put simply… I don’t know. And anyone who tells you they do is a liar. Currency rates fluctuate each minute, both on the economics and the whims of City traders trying to second-guess those movements.

Of course someone will say, “Buy now”, someone else will say, “Wait”, a third that rates will stay the same. One will be right, and may say, “I told you so”, but that doesn’t mean they knew. 

So I don’t bother to guess. I just spend on my plastic abroad and it converts the amount I spend at the best rate as I spend (see how to get the best rates on the day you spend below), however…

‘If you’re nervous, hedge your bets’

To do this, buy roughly half what you need at today’s best rate – whether in cash or on a prepaid card (see how to get today’s best rate), and then for the rest just rely on the best rate on the day you spend.

If you’re really nervous, ask yourself, “Would I be content with today’s euro rate for my holiday money…?” If so, and your real fear is that the rate worsens so your holiday would be unaffordable, play safe and buy more than half now.

But if you do that for safety’s sake, it’s best to close your eyes afterwards. If the pound does strengthen, so you’d have been better off waiting, you don’t want bitterness from hindsight to ruin your holiday.

The easy option is to get and spend on a specialist overseas card, where the currency conversion is done at the time you spend.

These give you the same near-perfect exchange rates the banks get, in almost every country, time and time again, and unlike most debit and credit cards which add a 3% ‘non-sterling exchange fee’, these don’t charge. There are two standout picks right now (the links take you to full info).

• The Starling Bank debit card has no credit check (unless you want an overdraft) and has perfect rates on cash withdrawals as well as spending. Yet it’s new and I don’t know how long it’ll stay at this uber-cheap rate. 

How to lock in today’s best rate 

• Want today’s best cash rate? Compare rates from 30+ bureaux. If you want cash, of course you get the rate on the day you pay. Ignore any flannel like ‘commission-free’. What you want to know is, “If I give you £500, how many euros will you give me after all charges?” And that’s the way to compare.
  
  You can do this via TravelMoneyMax, which compares about 30 online bureaux. It also shows you how extortionate it is to change at airports. If you must do that, at least pre-order for pick-up, as you get a better deal.
  
  And beware paying for currency at UK bureaux by credit card, as this usually counts as a cash withdrawal, so there’s a fee and interest even if you fully repay – so it’s best to pay with a debit card, or cash.
  
  Do also think how you’re going to store the cash safely. Beware paying a bureau de change now, and letting it hold onto substantial cash for you for a time, as there’s little protection if it went bust.

• Get a UK euro bank account. This is only worth doing if you travel to Europe a lot (perhaps you own a holiday home) – or spend substantial amounts. A few UK banks offer these, including Citibank, Barclays and Lloyds Bank (monthly fees may apply, so check).
  
  They operate as a normal bank account, but in euros. If you’re depositing cash, the bank will usually do the conversion for you on that day, but be careful as the rates are usually awful – so don’t do it automatically, check in advance.
  
  You can often call the bank to try to negotiate a better conversion rate (especially for larger amounts). Alternatively, use one of the international money transfer firms to deposit the cash there for you.