Money matters: Holiday money

The trick here is not to put all your eggs in one basket. Take a small amount of local currency with you, a larger sum in travellers' cheques, and a debit card for ATM withdrawals, if possible. Get rid of loose change before you come home - foreign exchange dealers only convert notes.

Direct debit cards and credit cards

These are a hassle-free way of spending on holiday. Shopkeepers generally welcome plastic as payment and cards can buy you time before money leaves your account back home. Just remember to keep all receipts and bear in mind that:

• It's usually cheaper to withdraw cash abroad from ATMs using a DEBIT card - withdrawing cash on a CREDIT card can be costly
• Your bank or building society may charge a small fee for using ATMs abroad
• Not all banks and building societies have debit cards that can be used overseas
• Remember to check whether there are any perks for using your plastic on holiday
• If you buy goods abroad with a debit card the transaction may take weeks to process
• If you are dealing in a currency with lots of digits count them carefully before signing - you could be paying 10 times too much

Cash and travellers' cheques

Always take both of these on holiday. Travellers' cheques offer security, while currency is essential if you can't get to a bank immediately to change cheques. Also consider that:

• It's generally cheaper to change travellers' cheques at banks, not hotels, abroad
• Exchange rates for buying travellers' cheques and cash differ - check beforehand - and rates can even differ from dealer to dealer
• You can often buy currency more cheaply at bureaux de change than at banks
• Keep a note of the serial numbers on travellers' cheques, in case they are lost
• Try not to take more cash abroad than your travel insurance covers
• Changing money in the street is illegal in some countries

Buying currency - what to look for

There's usually a minimum charge of about £3 for converting money - but not always. Shop around and don't forget to take the bulk of your spending money in travellers' cheques. It's a safer option than cash.

• Check the fees for changing money - know what you're being charged
• Check whether you'll be charged for converting unused foreign money back into sterling
• Local-currency travellers' cheques can sometimes be used in shops and restaurants
• Check exchange rates for buying cash and travellers' cheques - they differ
• If possible, compare rates here and at your destination - they are often better abroad
• If you need a large amount of currency, order it in advance to ensure it will be in stock
• Buy local currency in low denominations, so you can tip an airport porter, for example

Whom should you buy from?

With so much choice, it's hard to know where to go for holiday money. Try to spread your net wider than travel agents and tour operators.

• Foreign exchange bureaux, post offices, banks and building societies all sell currency
• Some organisations don't charge account holders for buying or selling currency
• Choose a dealer that offers commission-free buying back of currency
• The best option would be a commission-free dealer offering good exchange rates