Holidaymakers are seeing their spending money worth an average of 12.8 per cent less in the most popular holiday destinations this summer compared to last, according to new analysis from Santander UK1.
The research reveals that fluctuating exchange rates are currently seeing the pound worth 12 per cent less in Eurozone countries than a year ago1. Over the same timeframe sterling has dropped by 13 per cent against the US dollar, while Turkey is the only currency in the 25 most popular overseas destinations against which sterling has risen over the past year.
Santander is advising holidaymakers to think carefully about the payment method they use for spending abroad as it can make a significant difference in terms of interest rates and charges for payments and withdrawals.
Matt Hall, Head of Banking and Unsecured Credit at Santander commented: “With the pound losing a significant amount of value on most popular currencies over the past year, holidaymakers’ pockets are already stretched but, by using a cost effective payment method, they can make sure they don’t inadvertently throw more money away.
“We would advise everybody to spend a bit of time checking out any fees or charges before making a decision about how to pay for their holiday spending. With the Santander Zero and All in One Credit Cards there are no foreign transaction fees on purchases made abroad so they are good options for those holidaying overseas. The Zero Credit Card also has the added benefit of having no fee for cash withdrawals which could be useful if you need to withdraw cash while away. It’s important to remember to choose the local currency option when using your card abroad to make the most of these features.”
The findings of the research also reveal that the average holidaymaker expects to part with £757 while abroad this summer2 – on average this would have been worth £868 when spending abroad a year ago.
When it comes to anticipated payment methods for holiday spending, cash exchanged into local currency while still in the UK will account for 40 per cent of overseas spend, 22 per cent will be on credit cards and 16 per cent on debit cards. Seven per cent of expenditure will be from cash exchanged into local currency while abroad, such as in a hotel, and the same percentage will result from cash withdrawals made in the destination country. Just five per cent of total spend will be via a pre-paid travel card.
Popular holiday currencies against sterling over the past year
| Currency | Difference in the value of GBP against this currency now compared to one year ago1 | Difference in local currency compared to last year due to exchange rate difference (GBP equivalent), based on an average intended overseas spend of £7571 |
|---|---|---|
| Euro | -12.0% | -£90.80 |
| US dollar | -13.1% | -£99.13 |
| Turkish lira | 5.5% | £41.62 |
| Canadian dollar | -10.1% | -£76.43 |
| Croatian Kuna | -13.1% | -£99.13 |
| Australian dollar | -14.7% | -£111.23 |
| Mexican Peso | -16.3% | -£123.34 |
| Thai Baht | -16.2% | -£122.58 |
| South African Rand | -24.0% | -£181.60 |
| UAE Dirham | -13.1% | -£99.13 |
Source: Santander, 2017
For the 60 per cent of Brits planning to holiday abroad this summer the most popular destination is set to be Spain (and its islands) with 17 per cent of those going abroad headed there. This is followed by the US (nine per cent); France (seven per cent); Greece (six per cent); and Italy (five per cent)2.
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Notes to Editors
1Santander UK analysis of historic currency rate data taken from xe.com. GBP exchange rates against local currencies taken for Monday 19th June 2017 and Monday 20th June 2016. Average rate change based on the number of people visiting the most popular holiday destinations (23 million travellers, or 75% of those going abroad), and weighted by the volume of expected travel by destination and expected money taken on the trip, revealing that the average holidaymaker will have a like-for-like £97.22 less spending power this summer than they did in the summer of 2016. This represents 12.8% of the average amount of money taken abroad (£756.69).
2Research conducted online by Opinium Research amongst a nationally representative sample of 2,005 UK adults between 9th-13th June 2016.
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Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. It has brought real competition to the UK, through its innovative products for retail customers and relationship banking model for UK SMEs. At 31 December 2016, the bank serves around 14 million active customers with c20,000 employees and operates through 841 branches (which includes 60 university branches) and 67 regional Corporate Business Centres. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.
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