Holidays are generally the highlight of everyone’s year – a time to retreat away from the 9-5, daily commute and other life chores. But planning a trip away can bring a lot of stress too. Many people are left questioning what is the most effective way to budget for a holiday? Where is the best place to exchange travel money? What card should I use abroad? These questions can rattle the brains of anyone who’s about to depart on their travels.  

We’ve put together some travel tips on how best to approach your holiday finances, and how to save money in the process:


Budgeting for a holiday

Holidays can come as a huge expense once you’ve added up flights, accommodation, spending money and niggly additions such as travel insurance and airport transfers. A good way to steadily build up your travel kitty, to ensure that you’ve got enough, is setting up a savings plan that you regularly deposit money into. You’d be surprised how quickly small desposits can add up!  

Caxton’s Travel Savings Plan is a great way to gradually build up your travel fund and get the most from your money, as you can strategically lock in your foreign exchange when the rate is good. You can save as little as £200 or up to £10,000 for your next trip, your overseas wedding, or holiday of a lifetime. Essentially - we do all the hard work for you!

With the likes of Brexit causing havoc with the foreign exchange market, being able to lock in a rate on a particularly good day can save you hundreds. Extra cash = more pina coladas on the beach.


Where is the best place to purchase my travel cash?

It’s always best to bring a small amount of cash with you every time you travel, for initial taxi transfers or hotel deposits etc. The rest of your travel money should be put onto a prepaid multi-currency card, for safe and secure spending.

When exchanging travel money, people can get sucked into changing their GBP to foreign currency at the airport as a last-minute, convenient solution. However, many people aren’t aware that using the currency exchange desks at airports will get you perhaps the worst rate possible for your foreign currency.

That’s because generally, airport currency kiosks offer very uncompetitive exchange rates. They know that once you’re at the airport, you’re essentially in a captive market with limited alternative options – so if you need to convert currency, you’re going to have to do it there whether you like the exchange rate or not.

That’s why organising your travel money in advance is beneficial as you get the gift of time and choice – you can shop around for places that provide the best rate. Or, to make life even easier, you can preorder your currency to be delivered direct to your doorstep with Caxton.

If you forget to organise your cash before you arrive at your holiday destination, a back-up option is to go to one of the ATMs in the new airport and use your Caxton card to withdraw the cash.  We do not charge any ATM fees whilst abroad.  


What card should I use abroad?

The best and most efficient way to make payments while on holiday is to use a prepaid travel card, such as the Caxton card. This is because it allows you to keep all your money secure in one place and enjoy spending fee-free whilst abroad. Caxton’s multicurrency prepaid card has the added advantage of allowing you to withdraw cash for free from ATMs, with a higher withdrawal limit than our competitors. Unlike many banks, we also don’t charge you any rip-off fees whilst you’re abroad.

However, there are some benefits to using a credit card that you should consider when booking larger expenses like your package holidays, hotels, or flights. If for any reason something goes wrong (such as the Thomas Cook saga), you’re covered by the credit card payment protection, or ‘section 75’ of the Consumer Credit Act.

If you want to bring your debit card as a backup in case you lose your prepaid card do so, but make sure to prewarn your bank that you are heading abroad so that you don’t have any transactions identified as fraudulent, but be prepared for fees and high exchange rates. Or, simply get a second back-up card on Caxton account, so you can still access your funds if your main card goes astray.


Always pay in local currency

When you pay for your purchases or withdraw travel money from an ATM when abroad, there’s another increasingly common trick to watch out for, which can end up costing you significantly. This trick is commonly known as Dynamic Currency Conversion or DCC.

If you use your card to pay for your restaurant meal for example, the waiter will put your card in the machine and before asking you to enter your PIN, will ask if you would prefer to pay in pounds (GBP).

You’ll sometimes be given this option when taking cash from an overseas ATM too.

Now, although you may think it is convenient to pay in pounds because you’ll know how much will be taken from your account straight away, don’t do it – ALWAYS PAY IN THE LOCAL CURRENCY.

If you choose to pay in the local currency, you will pay the standard exchange rate set by MasterCard or Visa (depending on your card issuer).

However, if you agree to be charged in British Pounds (GBP) the retailer or ATM provider can use a local exchange rate rather than the official MasterCard or Visa rate and, in some cases, this can cost you an extra 5% to 7% on your bill.

It’s especially important when using your Caxton card. If you already have the local currency on your card, your bill will be converted twice, from the local currency into pounds (at the merchants own expensive rate), then back into the local currency to be deducted from your card. If you have pounds on your Caxton card, it’s still preferable to pay in the local currency, that way Caxton will handle the conversion, not the merchant or ATM, and you will always end up getting a better rate.

This little-known DCC scam basically makes extra profit for the retailer or cash machine provider at your expense.


Time spent planning a holiday should be exciting and joyful, rather than stressful. Implementing a few of these steps into your holiday planning schedule can alleviate worry and save you money in the process. Remember – the extra pennies saved by sourcing your travel money early or paying in the local currency can be put to better use!