"Money Changes Everything" - What's the best way to pay during your holiday?

Whether you are travelling to France, Spain, Portugal or further afield, what's the most cost-effective way of spending money? Here is a quick guide to the options available:- Euros

Changing Pounds to Euros

The exchange rates offered by banks and the Post Office "over the counter" will always be below the headline currency conversion rate, so immediately you change your money to a foreign currency you will lose at least 2 or 3 % of the original value of the money.

Better rates are usually available if you order from the Post Office online, and have the money delivered or collect at a local branch. Online exchange rates will be better than if you turn up at a Post Office and change money over the counter.

If you exchange your holiday money at the airport or in Portugal you are likely to be charged higher commission fees and get a lower exchange rate than if you order online.

Cash withdrawal from ATM

Withdrawing cash from a foreign ATM using a credit card or debit card is an alternative to carrying around large amounts of cash, but each withdrawal that you make at a foreign ATM will incur charges. The charges will include a "non-sterling" transaction fee which usually works out at around 3-4 % of the total value.

Paying on a Credit Card

One of the main advantages of not taking large sums of foreign money on your holiday is to reduce the risk of theft, and for this reason credit cards and debit cards would seem to be a more sensible approach.

Generally a fee of around 2-3% of the total card transaction is charged for foreign credit card payments. It is worth checking the exchange rate with your credit card company before you travel.

If you are paying by credit card and the retailer asks you whether you would prefer to pay in Pounds or Euros you are advised to slect Euros as this will avoid exchange rates set by the retailer.