Should I get my holiday money now or after the referendum?

packed back of car Image copyright Thinkstock
Image caption Don't leave changing your money until the last minute, says Which?

Do you like gambling? Choosing when to change your hard-earned spending money into euros, or dollars or Thai baht, always involves taking a bit of a punt on which way the pound is moving.

If you wait patiently and something pushes up the pound, you're quids in. If you hesitate and sterling slides you're left kicking yourself over your losses.

But the decision has been made more fraught than ever this year with the EU referendum vote looming and reams of newsprint devoted to whether the pound is set to crash or soar or stay the same. It all seems designed to torment the indecisive holiday-planner.

Most observers think that if the vote is to leave, sterling is likely to slide, pushing up the cost of foreign currency. But, depending on how big the movement is, it may not make as much difference to your holiday budget as shopping around for the best currency exchange deal.

Image copyright Thinkstock
Image caption The currency markets never really take a break

The Bank of England has warned that sterling could fall "sharply" if there's a vote for Britain to exit.

How sharply? That's difficult to say.

And the Vote Leave campaign plays down that prediction.

"Exchange rates go up and down," says Robin Oxley, chairman of Vote Leave. "Any suggestion there'd be massive changes is incorrect."

Worth the wait?

And it's worth bearing in mind that markets have already built in some of the potential impact of a vote to leave.

Bob Atkinson of TravelSupermarket says "it remains unclear how the nation will vote on 23 June."

That uncertainty means the pound is already quite a bit lower than it would otherwise probably be.

"The money markets don't like that, meaning you will get less cash for every pound you exchange than would have normally been expected," he says.

Stay chilled

If sterling slides what does that mean for my holiday spending?


luxury ice creams

  • If you change £500

  • and sterling falls 2%

  • you'll only lose £10

Source: Thinkstock

Since the beginning of the year, when the markets first started contemplating the possibility of Brexit, the pound has fallen by around 6%.

In cash terms that means that if you exchanged £500 to euros, compared with 1 January, you'd get around £30 less.

And since August 2015 rates have gone down by around 10%, which means you'll get £50 less to spend on holiday this summer than last.

So there's potential for some revival of sterling if, after Thursday, it turns out we've voted for the status quo.

"If we could trust the opinion polls, we could use those as a gauge as whether to buy now or hold fire," says Mr Atkinson.

"However I would advise that if you have the spare cash now and know you are travelling in the next few months, then consider buying currency before the vote and locking in the rate."

Two beers

But it does boil down to which way you think the vote will go. And how much you think the pound would fall if we do vote to leave.

For example, if the pound were to fall 2%, that might well be reported as a sharp drop in news reports, but it is actually less than you'd think when it comes to holiday spending.


By shopping around for the best currency deal you could save the equivalent of


beers or

  • £61 per week out of your

  • £500 spending money


Plucking a few sample prices off last year's holiday postcards, 2% of your £500 spending money equates to just a couple of beers or maybe three luxury ice-creams.

Some experts, however, believe the pound could fall much further than 2%, with David Page, from Axa Investment Managers suggesting in the Financial Times it could fall by as much as 10%, which is of course a good many more ice creams'-worth.

How to buy

But as well as considering the impact of the referendum vote, it could be just as important to think about getting the best exchange deal.

Which? reckons that holidaymakers taking £500-worth of currency could save up to £61 a week by shopping around for the best rate and method of payment.

That could be enough for an extra 12 beers, or 18 ice creams, depending on where you go during your break.

"Holidaymakers who plan ahead can make real savings," advises Alex Neil, director of policy and campaigns at Which?.

That can involve comparing deals online, or loading your chosen currency onto a pre-paid card.

"Doing a few small things, like using an overseas spending card, pre-ordering currency and always paying in the local currency could help you to get more for your money."

Which? advice for saving money on holiday

  • Some credit/debit cards can incur substantial charges when spending overseas.
  • If you use a credit card to withdraw cash from an ATM you will often be charged interest, even if you pay off the card in full at the end of the month.
  • When paying by card abroad, always pay in local currency rather than in pounds sterling as you will typically get a better exchange rate.
  • Always ensure you ask for a receipt in case of any disputed transaction during your visit so you can ask your credit-card company for a 'chargeback' if necessary.

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