It's not always better to exchange before you fly. This doesn’t mean they’re not trustworthy, but it does mean that you could lose your money if they suddenly become insolvent. There's just one thing to consider when shopping around: not all currency firms are authorised by the Financial Conduct Authority (FCA), as they’re viewed as a ‘goods seller’ rather than a financial services provider. Fees and commission can significantly reduce the amount you get in your pocket by as much as £50 (depending on the exchange rate). In fact, shopping around before you exchange your currency is one of our top tips and can ensure you get the best deal and maximise your holiday spending money. If you’ve booked your break through a travel company that also offers exchange services, it’s tempting to go for the easy option and get your travel money from them. But did you know you should be doing the same when you exchange currency? Grabbing your dollars, euros or dirham from the first place you see could lose you a fair bit of money. Our top foreign exchange rate tipsīy now, most of us know it’s sensible to shop around for things like car, home and travel insurance to get the best deal. And while some countries, such as many EU member states, use the same currency as part of a ‘currency union’, it's unlikely you’ll be able to use your home country currency when travelling abroad. The four most widely used are the US dollar (USD), the Euro (EUR), the Japanese Yen (JPY) and Great British Pound (GBP). Why do I need to exchange my currency?Īcross the world, a whopping 180 currencies are recognised by the UN as legal tender. The most common is the floating exchange system, in which currency traders use factors such as a country’s economy, imports and exports, and inflation to set its value.Ĭountries that are less developed or economically volatile will have a pegged exchange rate, where the value of their currency against others is set by the government. Now, currencies’ worth is determined using one of two models. In the past, many currencies’ value was tied to the value of gold and each note would have equitable worth in the precious metal.Īs economics advanced and inflation crept in, this system became outdated for major economies like the US by the 1970s. Put simply, the exchange rate tells us how much of one currency we can exchange for another. What is exchange rate and how does it work? In this article, we share our top currency exchange rate tips and advice, from the best place to make your exchange to common mistakes you should avoid. 
Getting the most out of your money when you exchange can make your holiday budget go further.
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