Or should i use my US credit card instead?
In: 0
If your going to exchange currency id do it now before it drops lower, there is a chance it could pick up before then but it doesnt look likely. And things are going up in price all the time over here its not something you can avoid
So, if you went to a grocery store, and apples had gone down in price, you could buy more, right?
Money is no different.
You spend less dollar for the same amount of pound sterling now then you did in the past. So a trip to the UK from the US now is cheaper then it was before. However we do not know the costs next month. The pound may bounce back and become more expensive or this could be just the start and it could drop even further down tomorrow. And any efforts by the politicians next week could improve the pound or it could make it even worse. If you could predict the currency prices a month in the future you would be a very rich man.
For just a short trip of a week or so the currency prices does not matter that much and you can do what is most convenient for you. However the general advice is to convert your cash you need as soon as you decide to travel. You may end up spending more money then if you waited until later but at least you do not risk having to spend way too many dollars then you expected.
A strong dollar ( ie fewer dollars to the pound).is good for people changing from dollars to pounds, it makes things cheaper for them. The price in pounds is the same for a given item, but it will cost you less the stronger the dollar gets.
Id always take some cash (£200 would be ample) and also your credit and debit card too. You may find you get a slightly better rate using your credit card than cash as your credit card company obviously buys pounds on the wholesale market, so gets a better rate than you, and you will normally get some of the the benefit of that better exchange rate passed onto you.
Should you need more cash ATMs are everywhere, so getting more cash won’t be problem if you need it.
The flip side is that right now inflation is worse in the UK than the US per elsewhere in much of Europe. So if you have, say, hotel reservations that have the price listed but aren’t prepaid, a falling Pound is great. But if the price of a meal or theater tickets goes up by more than the exchange rate difference, it’ll still hurt.
>Or should i use my US credit card instead?
Yes, but only if the card has no foreign transaction fees.
Also, when you use your credit card abroad, you will sometimes be asked if you want to pay in dollars or in the local currency.
ALWAYS choose the local currency. If you choose dollars, you will have to pay whatever exchange rate the merchant offers, which will be worse than the one your bank gives you on your no-foreign-transaction-fee card.
When you’re in the UK, you have to be spending in Pounds no matter what. When the chip shop closes up for the night, that’s what they want in their register. Modern credit cards kind of disguise this fact by doing the currency conversion behind the scenes, but it’s still happening. The bank gives the chip shop the right number of pounds, then later bills you in dollars based on the foreign exchange rate at the time and likely some additional fee.
This means there’s no escaping currency exchange while traveling. Lucky for you, the fact that the USD is particularly strong relative to most other currencies right now means that you will be paying relatively less during your travels.
Get your pounds now while the dollar is strong, you’ll get more for your money. It may bounce back up within a week
Things will cost less. It’s unlikely to be ‘cheap’ still as inflation is also a problem in the UK.
If you had budgeted $1000 to spend, now you will have £940 to spend vs. a few weeks ago you might have only got £840 to spend…
It doesn’t really matter.
That’s not to say that changes in the exchange rate won’t affect you. It’s just that you can’t do anything about it.
You don’t have any idea how the exchange rate will move in the next month and neither does anyone else. If you trade your money now rather than later you have just as good a chance of getting locked into a bad exchange rate as you do of locking into a good one.
Why am I so confident in their ignorance? Simple. The exchange rate is set by the transactions of armies of currency traders. They spend all their time and resources trying to predict future exchange rates and then trade any time the current rate differs from that. Any claim that exchange rates will be higher or lower in the future is somebody claiming they are better at predicting exchange rate changes than the professional investors are.
If anyone wants to argue with that I’d suggest a simple challenge instead. Go invest in the FX market and see how you do. If you really think you know better than the pros, go ahead and leverage up. Mortgage your house to play the currency markets. Anyone who’s not willing to take that challenge is either less confident in their prediction than they claim or they’re broke (in which case you may not want to take economics advice from them either).
One of the advantages of using a CC is safety. There are a number of ways you can lose a pile of cash that you’re less vulnerable to with a CC. If you do so check the conditions to make sure they use a reasonable exchange rate and don’t tack on some crazy fees.
Latest Answers