Understanding travel money - what you need to know

If you’re planning a trip abroad, it pays to be prepared. Here’s our guide to help you when buying foreign currency.

What is an exchange rate?

An exchange rate tells you how much foreign currency you’ll get in return for your pounds sterling. For instance, a euro exchange rate of 1.12 would give you 1 euro and 12 cents for each pound you exchange. So if you spent £100, you’d get €112 in return.

Exchange rates can fluctuate, so checking the daily exchange rate can help you get the best deal when you want to buy currency and also help you decide which countries are good value for money for holidays. Keep in mind that past performance of a currency is not a guarantee of future performance.

Explore more: Travel Money rates

What are buy and sell rates?

Sell rate – this is the exchange rate at which you will be sold foreign currencies. For example, if you are planning a trip to the US you would exchange your pounds sterling for US dollars at the sell rate.

Buy rate – if you return home with unspent foreign cash, you can sell it back to foreign currency providers in the UK. For example, if you had just returned from Japan, you could exchange your yen back into pounds sterling at the buy rate at any of our HSBC branches if you have an HSBC account.

Where should you get your travel money from?

You can buy foreign currency from banks, post offices, bureaux de change, currency websites, some travel agents and large supermarkets.

Spend some time looking at the options available and the varying rates as well as any associated fees so you can be sure you’re getting the best deal.

HSBC’s Travel Money has the same exchange rates online, in branch or over the phone. There are no delivery fees for home or branch orders. The minimum order value is £100.

Why shouldn't you exchange your money at the airport?

While you might think it’s more convenient to buy currency at the airport, it can often be very expensive.

Airport currency exchange counters typically have no incentive to offer competitive exchange rates because travellers who are about to jet off have limited options. Higher operating costs can also be passed on to travellers.

Some airport exchangers charge a service fee which can add up to as much as 10 per cent of the total money exchange. So, in this example, you could lose £10 for every £100 you exchange.

How should you pay for your travel money?

If you use a debit card to exchange your money in the UK, it’s likely that your bank will treat it like any other cash withdrawal or purchase so you won’t pay any fees.

If you buy currency using a credit card, however, you may have to pay a cash advance fee of around 3 per cent. In addition, you’ll probably be charged interest on your payment straight away. That’s because foreign currency transactions are handled in a similar way to withdrawing cash on your credit card.

What if you run out of cash abroad?

You can withdraw extra cash from an ATM with your debit card. You can also use your cards to pay for goods and services at shops, restaurants and anywhere else that accepts Visa or Mastercard (depending on your card type).

Fees and charges may apply when you use cards abroad.

What next?