Two thirds of us are heading for a nasty holiday money shock

Holiday money exchange rate

A new study reveals that a third of us are confident that we know what we'll get when we exchange our holiday money - unfortunately most of us are wide of the mark - and we're in for a very nasty shock.

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No1 Currency asked people if they knew the exchange rate for their holiday destination, and 30% of people said they did. They then asked people to estimate what they would get for their pounds, and 64% of travellers over-estimated. The problem was particularly acute among younger people - because 73% of people aged 25-34 didn't know how many Euros they could get for their money.

Almost one in ten thought the Euro/Sterling exchange rate was more than €1.5 to the Pound, while 13% thought the Dollar/Sterling rate was more than $1.5 to the Pound. In fact, over the past five years the Euro/Sterling exchange rate has never been as high as €1.5; and even at its peak in 2015, it was below €1.4 to the Pound.

The exchange rate as been on a downward path for years now. In 2015 £100 would have bought you €139.18 and $150.94. In 2017, it will buy €114.75 and $121.47.

Simon Phillips, Retail Director at No1 Currency, comments: "After last year's Brexit ruling, the Pound is on the ropes against the Euro and Dollar. Too many Brits continue to think it is worth a lot more than it is."

It means we could be in for a nasty surprise when we exchange our cash. Even more worryingly, if we pay for things on plastic while we're away, we could end up paying a third more than we think if we use rough rules of thumb to do the currency conversion.

What can you do?

Before you decide where to take your Easter or summer holiday, it's important to check the exchange rate, so you fully understand the impact on the cost of your holiday before you pay any cash over at all.

Next, you need to think about when to change your holiday money. Philips points out: "Conversion rates can make a substantial difference to the cost of a holiday. In the current economy with the volatility of the pound, consumers should be aware of the rapidly changing exchange rates."

The experts agree that currency exchange rates are unlikely to recover substantially in the short term, and may even fall further. This would mean it makes sense to exchange your holiday money sooner rather than later. However, there are no guarantees, so one option might be to exchange half of it now, and half of it just before you travel - so you can at least be sure that you don't end up exchanging everything at the worst possible time.

Finally, the dropping of the pound means it's more important to shop around for the best possible exchange rate. If you are exchanging a reasonably large sum of cash, it's worth looking at the online currency exchange firms too - because even when there is a delivery fee, you could still end up with more holiday money than on the high street. It's also worth looking into a prepaid holiday travel card, which will fix the rate when you load cash onto the card, but save you from carrying too many notes around with you for comfort.

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The five worst holiday disasters

If you are a victim of a strike, or any other event beyond the airline's control (including ash clouds!), they must offer you a refund (in which case it's up to you to find a way home) or an alternative flight. While you are waiting for the flight you have the right to food and refreshment and accommodation.

If you are on a package holiday, your tour operator is entirely responsible for looking after you until you get back to the UK.

This is more likely to happen due to the financial crisis, but in some situations you are covered. 

If you pay by credit card and it's over £100, you'll get a refund from the card company. 

Your travel insurance may well cover you too, but check before you go.  

Talk to the airline, and if it is temporarily misplaced they should arrange for it to be sent to your accommodation, and you should be either given cash to cover the essentials in the interim.

If it's completely lost you must wait 21 days and then make a claim for compensation. If you are travelling as part of a package you can claim costs from your operator.

If you are travelling within the EU you need an EHIC card, which gives you access to public healthcare. However, this won't necessarily be free, and if you need extra services such as accommodation for a carer, a helicopter home or a delayed flight, you could end up seriously out of pocket.

The only protection that will guarantee you will be looked after without running up a horrendous debt is by having travel insurance - which often covers up to £10 million of costs.

The most common form of theft is pick-pocketing, followed by theft from a car and bag snatching. Meanwhile, 752,000 of those surveyed had items stolen from their hotel room or villa.

If you have anything stolen, your only protection is insurance. You need to tell the local police immediately and get a crime reference for your travel insurer.


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