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Seven holiday money tips to keep costs down

With exchange rates shifting daily, it can be difficult to know just how much your holiday will cost. But if you’re about to go away, we’ve got some tips and tricks to help you control your spending and keep your holiday affordable.

Money Advice Service research found that on average we overspend by £220 per holiday – a decent sum when budgets are stretched. Often that was down to getting carried away, or being faced with unexpected costs.

But we're also spending £60 more per holiday than we need to because we choose to pay in sterling rather than the local currency, according to currency exchange firm FairFX.

So how can you avoid these extras? Here are our seven top tips – three on getting the best rate for your holiday money, and four on keeping costs down when you’re spending.

Travel money

One way to cut some costs is to think about how you’re going to spend.

Change your money before you go

It’s always useful to have a little bit of cash on you. The worst exchange rates will be at the airport, so don’t leave it to the last minute. Instead order it in advance or, even better, use a comparison site such as from Money Saving Expert or to find the best deals.

Specialist credit card

Be careful of using your debit or credit card as they’ll probably charge you extra each time you use them to pay or withdraw money. A decent alternative is to hunt down a specialist credit card or bank account where you get fee-free banking overseas.

Get a prepaid card

If you want to lock in at a certain exchange rate, a prepaid card – the modern equivalent of Travellers Cheques - will give you that security, though bear in mind rates could go up as well as down, and there are fees for using them.

Holiday spending

It’s not just how you spend, it’s what you spend it on that can push the costs up higher than you planned.

Plan before you go

Our research found one in five of us forget something essential, so think about what you might need when you’re away and make sure you pack it.

It’ll also help to do a little research on excursions, transfers and activities – if you know the cost you can budget for everything else.

Take cash out with you for the day

Sometimes the day takes over and the costs mount up without you realising. One way to avoid this is to only take out with you the money you can afford to spend that day. It should help focus you away from the things you can’t afford to cheaper – but still fun – alternatives.

Pay in the local currency

If you are paying by card, always choose to pay in the local currency. If you pay in pounds you’ll usually get a far worse exchange rate.

Don’t just spend your leftover cash for the sake of it

Finally, if you’ve any cash leftover at the end, don’t just splurge it for the sake of it. Our survey found we spend an average of £14.27 at Duty Free just to get rid of spare currency – but even though you lose a little changing it back to sterling, it’s still money in the bank at home you can put towards next year’s break

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