How to avoid holiday currency charges

There's only one thing more certain than sunshine if you holiday abroad: your holiday spending will cost you dear. Holiday currency exchange is a licence for banks to print money, says Dido Sandler in FT Money. She has a point. Foreign loadings, transaction fees and commissions are just some of the extra charges you could end up paying.

Let's say you withdrew £1,000 from a cashpoint abroad with a Lloyds credit card. You would pay a 2.75% foreign loading fee and a 2% withdrawal fee. In addition, your interest rate would be 19.5% and there's no interest-free period. So you would pay a total of £47.50 in charges.

There's got to be a better way. If you take cash, make sure you buy it before you go. If you order your currency on the internet, £500 would buy you €707 from Travelex but the same company would give you only e685 at the airport, according to Alison Steed in The Daily Telegraph. You can keep the cost down by using a firm that doesn't charge commission try the Post Office, Marks & Spencer or Thomas Cook. Also, shop around for credit cards and bank accounts. Nationwide's credit and debit cards do not charge a foreign usage fee and HSBC's new Plus account also offers free cashpoint withdrawals abroad.

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