Holidaymakers abroad losing billions through making bad payment choices

ALEXANDRA MORGAN

but they can be even more costly. As well as adding exchange commission of around three per cent, many – including those from Bank of Scotland, Halifax, Lloyds, Santander and TSB – charge a further fee of up to £1.50 per transaction.

Like credit cards, most levy an additional ATM fee for cash withdrawals, but they do not charge interest. This means it is better to use a debit card to access cash, avoiding small withdrawals, and take a low-cost credit card for purchases.

Do not forget to tell your credit card provider you are going abroad, though. When it sees foreign transactions it could assume the card has been stolen and block it.

If you are a frequent traveller, check what your bank charges for overseas debit card use. If you do not like what you hear, move to a cheaper one or open a second account elsewhere.

Another option is to use a prepaid currency card. This can be especially useful for those with a poor credit history, as there are no application checks.

You load the card with the currency of your choice before leaving and use it like a debit card until it runs out. If visiting more than one country, you can load sterling – and spend any leftover cash when you get home – but this may incur transaction charges.

Using a prepaid card means you cannot spend more than you can afford and the money is protected if it is lost or stolen. However, if this happens, you may have to pay for a replacement.

Charges for prepaid cards vary dramatically, so use a financial comparison site to find the best for your needs. Look for one with no transaction fees

Tourists failing to shop around for competitive currency rates are wasting £1.7bn a year, according to currency provider FairFX.

and the most favourable combination of charges for issue, foreign exchange, cash withdrawals and top ups.

For euro and dollar cards, consumers’ organisation Which? recommends AA, Bread FX, Caxton FX and Easyjet. For sterling, it likes Revolut and Monzo, which have market-leading exchange rates and no overseas spending fees.

Cash withdrawals are free with Monzo, but Revolut charges two per cent if you take out more than £200 a month. Both are managed via smartphone apps, which have to be downloaded first. Money is added using a debit card, Apple Pay or bank transfer.

For those without a smartphone, Which? rates the AA Worldwide and ICE Travellers sterling cards.