6 Ways to Maximize the Improved British Pound Exchange Rate
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This week, more than 17 million Brits voted for the United Kingdom to leave the European Union. The immediate result was wild currency fluctuations, significantly affecting the pound sterling, and to a lesser extent the Euro. That essentially means that Europe is now on sale. If you’re planning to travel to Europe soon, or you’re there now, there are several things to keep in mind as you go about your transactions — most likely at a lower cost than you may have expected.
Just how much has the value of the pound changed? Yesterday, one dollar would have bought you 0.67 GBP. For a short time earlier today, one pound was worth just $1.32 — apparently the lowest it’s been since 1985. As of this writing, you can expect to get 0.73 GBP per dollar. The USD has also climbed against the Euro, with one dollar now worth €0.90, compared to €0.88 yesterday.
Here are six ways you can make the most of this significant currency change.
1. Ask your hotel to process your stay as a new transaction
This won’t work if you’ve already checked out, but if you’re currently staying at a hotel and you’ve authorized your card with a deposit at check-in, ask the hotel to process your final bill as a new transaction, so you don’t end up getting stuck with the less favorable exchange rate that may have been locked in on the date your card was authorized. While most clerks should know how to do this, you might want to pay with a different card than the one you provided at check-in, just to avoid any potential confusion.
2. Avoid returning products purchased before today
If you’re traveling in Europe or you’ve order items from abroad, you’ll likely score a big discount if you make a large purchase today. If you swiped your card before this morning, however, you’ll want to avoid returning any goods. The reason? Your transaction has likely been processed at a less favorable rate — if you make a return now, your GBP or Euro refund amount will remain the same, but the converted amount will be significantly lower. So instead of making a return, consider exchanging items (or keeping them).
3. Consider withdrawing extra foreign currency
If you’re in Europe currently, this could be a good time to stock up on Euros and pounds. While the exchange rate could change for the better (as far as the dollar is concerned), the Euro and pound could also recover a bit, depending on the UK’s outlook. Additionally, while you can’t be entirely certain what exchange rate you’ll get when paying with a credit card, I’ve found that ATM withdrawals closely match the realtime rate. If you can, be sure to use a bank account that waives fees on international ATM withdrawals, as exchange and transaction fees can eat into any potential savings.
4. Don’t rule out British Airways award flights
Fuel surcharges and sky-high UK taxes make BA economy redemptions unappealing, and that doesn’t change much here, but the currency fluctuation does make taxes and fuel surcharges a bit more palatable. Also, note that you may be able to score a discount by booking on the British version of an airline’s site — just be sure the domain ends in .co.uk or you’re purchasing via a UK-based travel agency, as US sites may use outdated exchange rates. If you’re in the market for an award (or even a revenue) flight, this could be a good time to act.
5. Track the exchange rate in realtime
While your credit card exchange rate may not be the most current, it’s still important to be aware of currency changes during your trip. One dollar may buy 73 pence today, but the rate can change significantly in only an hour or two, as we saw following the exit vote. Use an app like XE Currency Converter to ensure that you’re working off of the most recent rates. You can also check the rates that Mastercard and Visa use for credit card transactions — as you can see, they tend to lag a bit.
6. Avoid foreign transaction fees
Nothing changes here — while less money spent will mean lower fees, the FTF rate stays the same. The rewards you’ll earn very rarely outweigh the cost of a foreign transaction fee, so be sure to avoid cards that charge fees, even if that means forgoing valuable category bonus points. Cards like the Chase Sapphire Preferred and Citi Prestige waive these fees and still you earn bonus points on certain spend, such as airfare and hotel stays.
The exchange rate can have a very positive impact on your experience abroad. With significant fluctuations, expenses that were out of reach before can be more attainable following a major government action, such as what we’re seeing here. If you’ve been on the fence about a trip to the UK, it certainly seems like this is a great time to go!
Featured image courtesy of Shutterstock.
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