The pound sterling (£), sometimes simply called » Sterling «, is the official currency of the United Kingdom. You can change your money to pounds in different ways, but you can’t actually spend your own national currency, not even euros, without changing it first.
As soon as you start planning your trip, start thinking about how you will handle your spending money in the UK. Take enough time to consider the convenience, safety and value of various options and to open new bank or credit card accounts if necessary.
These are the options:
1. Credit and debit cards: the easiest and cheapest
These are hands down the cheapest and most convenient way to pay for things and get cash in the UK provided you use them correctly. Consider the pros and cons.
The professionals
- Credit card companies apply a wholesale / interbank exchange rate in effect when your payment is processed. The rate will go up and down, but it will always be a commercial rate, available to banks and large organizations, much better than the retail foreign exchange rates available to consumers without a prescription. So you get more for your money.
- Most card companies don’t add additional transaction fees on goods purchases (although they do when you buy cash).
- If you pay your credit card bills before adding interest, or make sure you have enough money in your debit account to cover your expenses, you will not be subject to any additional charges.
- They are widely accepted – you can pay for just about anything with a UK debit card, from a carton of milk and the daily newspapers or beer in a pub, to big expensive goods. In the UK, people can even pay their taxes and electricity bills with a debit card.
- ATMs or ATMs are everywhere. Most of the main streets in town will have a selection of ATMs. They are available at gas stations, cinemas, banks and some stores. This makes getting cash at any time of the day or night a breeze.
The cons
- Some cards are not recognized or widely accepted in the UK. You may have difficulty using the Diners Club and Discover cards. American Express cards are sometimes rejected. Stick with the big two, VISA and MasterCharge, and you shouldn’t have a problem.
- Some merchants may require a minimum purchase to accept a credit card. This is especially true at local little mom and dad stores.
- Bank charges may apply. Bank, Building Society and Post Office ATMs in the UK (which is most of them) do not charge an additional fee or commission for obtaining cash. But your own bank or card company probably will. The lower currency transaction fee is worth shopping around for because this varies from card to card and between issuing banks. You may be charged between $ 1.50 and $ 3.00 or more per foreign currency cash transaction.
- A small number of ATMs charge for withdrawals and they are worth avoiding. ATMs in small convenience stores and some motorway rest stops can be part of business networks adding extra fees – a minimum of around £ 1.50 but sometimes a percentage of your transaction. Try to avoid using these machines except in an emergency. Instead, look for ATMs associated with big UK banks, building societies (like savings banks) or leading stores (Harrods, Marks & Spencer) and supermarkets.
- You may need to get a new card to meet European chip and pin standards (more on that below).
- A word to the wise: use your credit card to buy things, but use a debit or ATM card to get cash from ATMs. When you use a credit card to shop, no interest is charged until after the payment due date (usually 30 days or at the end of the month). But, when you use a credit card at an ATM, the interest immediately begins to accrue. With a debit card, as long as you have money in the bank to cover your expenses, no interest will be charged.
The chip and pin problem
The UK, along with most of the rest of the world, has been using Chip and Pin cards for over a decade. The cards have a built-in microchip and customers receive a unique 4-digit PIN number that they must enter at ATMs or point-of-sale machines to use their cards.
The US has been the only reserve, relying instead on cards with magnetic stripes that generally require a signature. All of that is finally beginning to change. The EMV (Europay Mastercard VISA) group , which developed the global open chip and pin smart card technology, has been trying to persuade American merchants and card issuers to switch to chip and pin for a long time. In October 2015, to force the problem, they changed their rules. Since then, if a card is used fraudulently, merchants or card issuers that do not participate in the chip and pin protocol will be held liable for the cost of the fraud.
Because of this, EMV pin and chip smart cards are becoming more and more available in the US and old style cards are gradually being replaced to meet the global standard.
What this means to you
If you already have a chip and pin smart card, you will have no difficulty using it when your card brand is accepted. Card reading machines used in stores, banks, and post offices will still have a magnetic stripe reader so you can swipe your card on the top or side of the device.
But if your card requires a signature (either magnetic stripe and signature or chip and signature cards) you will have problems, especially when no human teller is present to accept your signature. Without a chip, your card will be rejected by ticket vending machines (at train stations, for example) and by automatic gasoline pumps (gasoline). And even with a chip, you will need a PIN number to use your card with these machines.
To avoid discomfort:
- All bank cards and credit cards have a 4-digit PIN number, even if your bank or card issuer hasn’t given it to you. Order one for each of your cards. You can then use your card at an ATM or swipe it at a point of sale terminal and authorize the transaction with your PIN number.
- Get yourself a chip and pin card. Most of the larger US banks are now offering them or replacing their customers’ existing chip and signature cards with chip and pin cards. If your bank doesn’t already have them available, open an account with a bank that can give you one.
And the no-contact problem
Since 2014, most credit and debit cards issued to UK consumers have a contactless payment feature. If the card has it, there is a symbol that looks like sound waves printed on the card, as shown above. These cards can be used for small payments (in 2017, up to £ 30 in the UK) by simply tapping them on similarly equipped terminals. Very conveniently, these cards can be used like Oyster Cards to access London’s underground buses. London Overground and Docklands Light Railway. Some mobile phone applications that display the contactless logo can also be used to pay for small amounts.
If you are visiting the UK from Canada, Australia, or multiple European countries, you may already have one of these contactless cards and can use them in the UK where the contactless symbol is displayed at the payment terminal. Starting in 2018, some US banks have begun offering contactless credit and debit cards in partnership with international card issuers. Chase, for example, is offering this form of payment to its customers as of February 2018. If you can, get your hands on one of these, as it is the most convenient way to pay small amounts.
If you can use a contactless card, please note that your transaction will continue to be subject to currency transaction fees charged by your bank or card issuer.
Apple Pay
If you have an iPhone, you can use Apple Pay where contactless payments are accepted and for more than the £ 30 contactless limit. The Apple Pay UK site has a list of some of the main companies that accept this form of payment at the point of sale.
Travelers checks
Traveler’s checks were once the gold standard when it came to carrying travel money. And perhaps, in some parts of the world they may still be a safe option, but they are currently the most expensive and most inconvenient option for the UK.
The professionals
- They are very safe – as long as you keep a record of the check numbers (other than the checks themselves), and as long as you keep a record of the emergency number to call in the country you are visiting, it can be lost or stolen. checks replaced quickly, at no additional cost.
- They are available in various currencies, including dollars, euros, and British pounds.
The cons
- They are expensive, possibly the most expensive way to take money abroad. First, you will generally be charged a fee of one percent of the total value of the checks you purchase. If you buy them in a foreign currency, that is, you spend dollars to buy sterling traveler’s checks, the seller’s retail exchange rate will apply and you may also pay a commission for the currency conversion. If you buy them in dollars, and plan to exchange them for local currency when you arrive, you will still have to accept a retail exchange rate (usually much less advantageous than the interbank rate of the day) and probably a commission in foreign currency as well.
- They are very inconvenient. In the UK, with the exception of tourist magnets like Harrods and very expensive hotels, almost none of the shops, restaurants and hotels accept them. In fact, very few stores in the UK accept any type of check. Therefore, you will have to look for exchange offices, banks and post offices, during the business day, to collect them. Currency exchange offices, the European name for commercial currency exchanges, are for-profit companies and generally offer the worst exchange rates. And banks will only cash traveler’s checks if they have what’s known as a correspondent relationship with the bank that issued them.
3. Prepaid currency cards
One way to avoid the chip and pin problem is to purchase a prepaid credit card, such as the Travelex Cash Passport or Virgin Money Prepaid MasterCard. These are cards that you prepay in your own currency or in the currency you want to spend. Some can be loaded with multiple currencies at the same time. The cards are associated with one of the main international card organizations, usually VISA or MasterCharge, they are integrated with chip and pin technology and can be used where those credit cards are normally accepted.
The professionals
- An easy chip-and-pin way
- Easier to control your expenses. You load the card with exactly what you want to spend and then use it as cash.
- Security is guaranteed as long as you protect your PIN number.
The cons
- Initial purchase price and above-average ATM cash fees can drive up costs
- Some can only be loaded with additional funds in person at a branch of the company that sold it to you, in your own country.
- Hidden charges: If you leave a balance on the card and plan to use it for another trip abroad or other special purchases, that balance may be reduced by monthly “inactivity” charges. Read the fine print.
And one last warning about prepaid cards.
Whatever you do, DO NOT use these cards to guarantee your hotel or rental car bill or to buy gasoline from automatic pumps. In these situations, an amount, which can be £ 200 or £ 300, will be put on hold to ensure that you pay your invoice. The problem is, even if you don’t spend that much money, it can take up to 30 days for those funds to release. In the meantime, you cannot use the money you have put on the card for the rest of your trip. Use your credit card for guarantees, then settle the bills with the prepaid card.
4 cash
Then of course there is always good cash, or at least there used to be (see below). You’ll want to have some local currency in your wallet for tips, taxi fares, and small purchases. How much you carry depends on your own spending habits and your confidence in carrying cash. As a general rule of thumb, plan to carry as much sterling as you can carry in your own currency when you are home.
There is a catch. In the UK, especially in big cities, a small but growing number of businesses, especially cafes and bars, refuse to accept cash and only accept card payments. This is still quite rare, but we were surprised in November 2018 to offer a £ 10 note to pay for a coffee and croissant just to show a sign saying the restaurant was not accepting cash. These days, an internationally accepted credit card is still the safest type of travel money.