Credit cards Updated:
Holidaymakers are set to waste millions of pounds by using their credit cards when they are abroad.
While the majority of jetsetters still prefer to take cash away with them, new research from Halifax has found that the number of people turning to plastic whilst on their holidays is increasing.
Almost a third (30%) of holidaymakers said they will use their credit card abroad, while over two in five (43%) will turn to debit cards.
But whilst card usage is on the rise, the number relying on cash remains constant.
Almost three quarters (71%) of Brits about to take their summer holidays said they prefer to change their money in advance and take cash away with them.
On average, holidaymakers spend £1,500 a year to get away and £500 whilst they are there, so choosing the right holiday money can make a huge difference to the amount they have to spend.
There are loads of different places you can convert your cash into the local currency of the country you are visiting, all likely to offer different rates and charge differing amounts of commission.
Exchanging your currency 'commission-free' might intuitively seem like the best option, but it is important to consider carefully the rate on offer.
Often it will not be the most competitive rate you can get, so it is vital that you shop around to check out all the rates available.
Getting your currency in the airport is unlikely to be the best way to go about matters either. Besides from offering a more limited choice, the exchange rate is unlikely to be that great.
The golden rule is to exchange your currency before you get to the terminal and make sure you do your research.
Currency exchange websites are the ideal place to start, with even some of the older and more trusted names such as the Post Office now offering money exchange facilities online.
If security abroad is a top priority for you, then traveller's cheques might be a better option than carrying loads of cash.
If they are lost or stolen, you will quickly be able to reclaim your money in full, and all without having to claim on your travel insurance.
As with cash, however, shopping around for traveller's cheques is a good idea.
Some places only offer traveller's cheques in certain currencies, while there might also be a fee for changing them.
Again, don't automatically assume that the commission-free deal is the best one out there.
Credit cards might seem like one of the most convenient ways to pay your way when abroad, but it is vital to remember that most credit cards charge a foreign usage fee.
This is typically around 2.75% of the amount you spend but could be higher still.
If a credit card is the way forward for you, then applying for one which specialises in the travel market is essential.
These will usually charge a lower foreign usage fee and, in some instances, have no fee at all.
If you're intending to pay off your holiday credit card spending over a number of months, a card with 0% on purchases for an introductory period is probably the one for you.
The most important thing to remember with credit cards is not to withdraw cash with them when abroad.
As well as possibly having to pay a foreign usage fee, it is likely you will also be charged a further fee for withdrawing the cash.
However, there are now some credit cards available that don't charges fees.
If you're off on your holidays soon and don't want to be hit by high credit card charges, the Moneyfacts.co.uk best buy tables detail all of the best fee-free alternatives.
Prepaid travel cards allow holidaymakers to preload a balance beyond which they cannot spend.
They are PIN protected and a great alternative to credit and debit cards.
However, should the worst happen and the card is stolen, you don't risk a criminal emptying your main bank account or maxing out your credit card.
Find the best credit card rates - Compare credit cards
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.