How to get the best deal on your travel money

There are ways you can make your holiday money go further and it’s wise to pay for your holiday using a combination of payment methods. Not only does this give you more flexibility, it will also protect you should the worst happen.


Cash is vital – for a start, you’ll probably need some to hand almost as soon as you land, depending on how you plan to get to your hotel or rented accommodation. Having cash in your wallet is also a useful haggling tool – apart from the fact that local shopkeepers and market stalls may only accept cash payments, they might also be prepared to offer you a discount if you’ve got money in your pocket.

However, don’t wait until the last minute to change your sterling into the local currency. Bureaux de change at airports and hotels benefit from a lack of competition, and in most cases offer poor exchange rates. It’s well worth planning your currency exchange before you've even packed your suitcase.

Equally, you should avoid your local bank; you may be in there anyhow but that doesn’t mean you will get the most for your cash. Instead, buy your currency in the same way you would insurance or a savings account – compare rates carefully and take into account things like commission and delivery charges.

The Post Office and Marks & Spencer tend to offer more competitive exchange rates than high street banks, but you can also go online to buy currency. Internet currency providers tend to offer competitive exchange rates, but remember that you may be charged for delivery so take this cost into consideration.

When changing your money, don’t be swayed by the promise of commission-free exchanges as this doesn’t automatically mean you’ll get more money for your pounds. Bureaux de change that waive commission may claw back some margin with poor exchange rates. In order to be sure you are getting the best deal, you need to compare the total cost in sterling of any foreign currency purchase – if in doubt, ask how many units of currency you’ll receive for your bulk sterling payment.


It may seem irresponsible to put your holiday purchases on credit, but packing your plastic is actually a sensible move. For a start, any purchases between £100 and £3,000 put on your credit card are automatically protected under Section 75 of the Consumer Credit Act – meaning you can get your money back should the worst happen.

If you still don’t trust yourself to take your credit card on your trip, at least consider paying for the flights and accommodation in advance on it.

If you do decide to take a credit card on holiday, then there are two important points to bear in mind. Firstly, don’t be tempted to withdraw cash using your plastic – this is extremely expensive as most providers charge a higher APR for cash withdrawals plus you are also likely to be hit with a fee of around 2.5% for the pleasure. 

Secondly, the vast majority of credit card providers charge for overseas transactions – these normally range between 2.75% and 3% and can add significantly to the cost of your overseas break.


It is possible to avoid these fees altogether by opting for a fee-free credit card – sadly, only the Abbey/Santander Zero credit card, the Halifax Clarity card and the Post Office waive these fees at the moment. Alternatively, Nationwide’s credit card (which used to be fee-free for overseas transactions) charges just 1%.

Most people rely on debit cards for day-to-day spending, as these allow you to make purchases in shops fee-free and withdraw cash from a hole in the wall without charge. However, using a debit card when overseas isn’t quite as convenient as it is in the UK.

Most providers charge their customers with loading fees and cash withdrawal charges when they use debit cards abroad – these can make purchases and cash withdrawals all the more expensive.

Generally speaking, it is best to avoid making small purchases with a debit card because, alongside loading fees, you may also be charged a one-off transaction fee by your provider.

Check with your bank or building society to find out what charges you will face when spending abroad, making sure you find out whether the fees are set or percentage-based.

However, If you do need to withdraw cash, it is probably preferable to use your debit card rather than your credit card - while you’ll probably incur loading and withdrawal fees, the money will be taken straight from your account so you won’t be hit with any interest.

If you do take a credit or debit card on holiday with you, make sure you make a note of the account details and the telephone number for cancellations in an emergency. You should also consider emailing this information to yourself and leaving it with a trusted friend or family member. 

Pre-paid cards and travellers' cheques

Research by Caxton FX shows that as much as £6 in every £90 goes to the bank in hidden charges and fees when a credit or debit card is used to withdraw cash from an ATM abroad.

You can avoid these fees by opting for a pre-paid card. Cards such as the Caxton FX travel card (available with euro, dollar or global traveller prefixes) and the Post Office Travel Money card, waive fees for ATM withdrawals and card payments while abroad. You should pre-load them with cash before you go, this is usually subject to a minimum load amount, and bear in mind it can take a couple of weeks for your card to be delivered so order it well in advance.

You can’t go overdrawn on pre-paid cards and you – or anyone else – can top them up online and over the phone. Look out for deals that also provide competitive exchange rates, so you can fix this when you load the card with a foreign currency.

It's fairly easy to get a pre-paid card, as no credit checks are done when you apply. They are ideal if you want to budget when abroad but can also be used in the UK and for shopping online.

However, bear in mind that pre-paid cards aren't necessarily free - there might be a charge for opening an account, putting money onto the card or withdrawing your cash.

Another payment option is travellers’ cheques – while these have become less popular in recent years, they remain a good way to buy currency without having to carry a lot of cash with you. And they are an ideal way to avoid credit and debit cards fees, and to protect your money should you lose your bag or fall victim to theft. Just remember to make a note of the serial numbers so you can replace these should you need to.

Also bear in mind that exchange rates of these cheques aren’t always as competitive as changing currency, plus you’ll need to show ID in order to cash them. Not all retailers accept travellers’ cheques, while other outlets will hit you with commission or handling fees. Larger denomination cheques will, therefore, cost you less to exchange.

It can be expensive to change travellers’ cheques back into cash once you return from your holiday, but as they don’t carry expiry dates you can keep unused ones until your next trip abroad.