While British travellers are gloomily resigned to the falling spending power of the pound abroad, foreign currency providers are battling to win their business this summer.
By Jeremy Gates
Raphaels Bank - trading to consumers as ICE (International Currency Exchange) - has installed its first ever triple currency dispensing ATMs at Birmingham, Edinburgh and Manchester airports. The machines are all commission free and promise easy access to Sterling, Euros and US dollars.
There are four Raphaels ATMS at Manchester Airport, plus others at the Eurostar stations of St Pancras and Ebbsfleet. All accept LINK, Visa, MasterCard and Amex cards.
Raphaels ATMs are at other regional airports - including Southampton, Luton, Norwich and Exeter - and more may appear, depending on demand. Director Mike Smith promises "competitive, convenient access to foreign currency.
"Travellers can avoid queuing and paying commission", he says. "They will also save on overseas ATM and credit cards."
Traditionally, buying foreign currency at airports has been a pricey option because exchange rates there tend to be poorer than those online and in the High Street.
Smith says withdrawing £500 in foreign cash at one of Raphael's airport ATMs would cost 6% plus a £3.50 fee - a total of £33.50. A better-prepared traveller using his company's online overnight ordering service would save £20 of that fee by having the money delivered to their home.
Tesco launched Euros-only ATMs in 2007 but other rivals soon joined the market - not least because ATMs handling foreign cash are potentially much more profitable than the 60,000 ATMs that only dispense Sterling.
Marks & Spencer has opened 21 at existing stores so far this year, with another 20 opening during the summer. Their machines dispense up to £500 of Euros and dollars every day, subject to individual credit limits.
Its service is commission-free, and because it is treated as a retail purchase rather than a cash advance, holders of M&S store and credit cards can enjoy up to 55 days interest-free credit on withdrawals. Until July 13, anybody buying a minimum £250 worth of travel money at M&S also gets a £10 clothing voucher.
This week the Post Office, by far the biggest provider of overseas currency, began trialling ATMs at 13 branches. These will enable customers to collect commission-free Euros or dollars on their debit or credit cards, with a similar exchange rate as it pays across the counter.
The Post Office says that UK holidaymakers, who took a staggering £7.1bn from overseas cash machines in 2007, could make significant savings by collecting the money in the UK.
Helen Warburton, head of Post Office travel services, says: "Holidaymakers can make real savings by avoiding all the charges and commission associated with using overseas cash machines abroad."
Cash withdrawals using credit cards at ATMS abroad will incur interest from day one, while the majority of debit card withdrawals attract a foreign loading charge of up to 3%.
Travellers can also trim travel costs with Abbey's new Zero credit card - which waives both Abbey's usual foreign exchange fee of 2.75%, along with standard fees on balance transfers and cash advances. The card claims to be the first to abolish all three fees in one hit.
If ATMs carve out a larger share of the foreign exchange market, prepaid cards appear to be the safest way of ensuring a good exchange rate.
Stephen Heath, at FairFX card (which launched in November 2007 and is marketed through the retailer Matalan and online): "Most customers putting standard bank cards into airport ATMs will get the airport rate.
"With us you always get the rate at which the card was pre-loaded - whether it's in an ATM, a restaurant or a shop."
Heath claims FairFX delivers the keenest and most transparent forex rates in a competitive market - particularly appreciated by US-bound travellers who fixed their rate last year when the Sterling bought two dollars. Since then, the pound has fallen back towards 1.85.
Budget and independent travel specialist STA Travel has also launched a branded prepaid cash card to help young people manage money more efficiently on their travels.
The STA Travel Cashcard, set up in association with Tuxedo Money Solutions, enables travellers to hold up to £5,000 in a secure online "eccount" from where it can be safely moved onto the card by text, via internet and by phone, as and when needed.
The STA card, with chip and pin security, offers access to 1.3m ATMs and 25m retail outlets.
However, Fraser Millar, M&S Money's Head of Travel Services, advises: "Depending on the level of security which they require, travellers should continue to use a mix of cash, credit card and debit card to cover their foreign spending.
"For most people, it is a question of balancing convenience with security."
INFORMATION: Abbey Zero (0800 389 9905); Raphaels Bank/ICE (01455 897 800 and info@iceplc.com); M&S Travel Money (0800 363 484 and www.marksandspencer.com/travelmoney); STA Travel Cashcard (0845 872 0812 and www.statravel.co.uk); Post Office (08458 500 900 and www.postoffice.co.uk); FairFX (www.fairFX.com).
POUNDNOTES
:: Until now, 'negative equity' was a worry only for homeowners with a loan on their home exceeding its value in a falling market. But motorists could soon find themselves in a similar situation, with the annual running costs of their car exceeding its value.
Mark Monteiro, product manager at price comparison service uSwitch.com, says the average car is now worth £4,227. It currently costs almost £2,200 a year just to keep a car on the road, so 48% of an average car's value is spent annually on fuel, tax and insurance.
If petrol, currently costing 117.2p per litre eventually hits £2.30, as Gazprom has warned, the average driver will face an annual fuel bill of over £3,300 - £129 each time they fill their tank.
In 2009, when British drivers might have to fork out over £104bn a year on fuel, total running costs of a car might have climbed to £3,800 - 91% of the average car's value. Millions of drivers will be spending more to keep their car on the road for a year than the vehicle is actually worth.
Enquiries: uSwitch.com (0800 093 0607).
:: Fixed-rate mortgages costing less than 6% are set to disappear over the next few weeks after dramatic swings in money markets, predicts Francis Ghiloni at mform.co.uk, a free online service intended to help borrowers to find the best value packages.
He says that any loans coasting less than 6% - like the Skipton two-year deal at 5.79% - effectively cost much more because of the clunking fees that many borrowers have to add to their loan. That Skipton loan, for instance, comes with a £998 fee.
mform.co.uk advises borrowers to look closely at competitive discount mortgage products, which currently include a two-year discount from HSBC with an initial rate of 5.63% , plus £249 fee, and a Woolwich offer starting at 5.74% with no application fee at all.
:: Beleaguered Bradford & Bingley has to raise new cash, and one way to do so is to tempt savers with some of the highest interest rates on the High Street. Its Internet Saver 3 is an internet-only account on deposits from just £1, promising to pay 6.51% gross/AER (5.21% net) and agreeing to match Bank of England Base Rate until January 1, 2010.
Customers can open and operate the account at www.bradford-bingley.co.uk.
:: Soaring living costs are hitting pensioners hardest, says Alliance Trust. It says that for the first time in six years, both 50-64 year olds and 65-74 year olds are facing inflation rates of more than 4%. The pain is caused mainly by electricity prices (up 10%), food (up 9%) and petrol (up by almost 20%).
:: HIGH FIVE SAVERS
Phone No Rate Account Period Deposit Interest paid
Principality BS 0845 045 0452 7.15% (F) Fixed Rate Bond 94 Two Years (S) £10,000 Yly
FirstSave www.firstsave.co.uk 7.10% (F) Fixed Rate Bond One, Two, Year Bonds £1,000 Yearly/On maturity
Heritable Bank 0845 607 1212 6.60% 60 Day Notice Issue 1 60 Days (B) £1,000 Yly
Abbey www.abbey.com 6.50% Instant Access Saver Instant £1,000 Yly
Kaupthing Edge www.kaupthing-edge.co.uk 6.31% None £1,000 Mly
:: TOP FIVE BORROWERS:
Phone No Rate Period Max% Adv Fee Incentive
First Direct 0845 610 0100 5.49% for two years 80% £1498 Yes
HSBC 0800 494 999 5.63% (FTB) for two years 90% £249 Yes
Mansfield BS 01623 676 345 5.65% for three years 75% £599 Yes
Skipton BS 0800 446 776 5.79% to 30/08/10 90% £998 Yes
Cheltenham & Gloucs 0800 272 131 5.99% to 31/08/13 75% £1094
Code:
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T- Operated by Telephone
*W- Operated by Internet
*H- Operated by Internet/Telephone
*S- Available only to those aged 50 or over
*R- Available to those aged 60 and over.
Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice)
