The choice is travellers cheques, currency, debit cards, credit cards, or a combination. Depending on the destination, a combination is usually best. Here we give you some information and advice on when each is appropriate.
(See our foreign currency page and our articles 'holiday money checklist' and 'taking credit cards on holiday')
Travellers Cheques
They may be antiquated, but travellers cheques are still the safest way of taking money abroad, as they can be cancelled if they are stolen. They are also good in countries with restricted currencies, such as Cuba and Tanzania - where you are unable to obtain their money outside their borders. In addition, exchange rates for travellers may be higher than for cash.
Most holiday destinations (except the USA) accept sterling travellers cheques and you will find this easier to exchange back when you return home. However, if your destinations are more remote, especially in South America, you will find the dollar cheques easier to use. You will also need them in the USA.
Best for: off the beaten track and in an emergency (keep £100 worth in the safe in case your cards are stolen)
Worst for: charges / acceptance / convenience
Debit Cards
Debit and Switch cards with the Cirrus or Maestro symbols can be used to take money out of 820,000 cash machines worldwide. You are also able to make purchases at seven million outlets worldwide. Exchange rates are good (you will usually get something near the banks wholesale rate) and charges on purchases can be as little as 75p per transaction.
However, you should expect to pay at least £1.75 for each withdrawal from a cash machine, so take out a larger sum (bearing in mind your travel insurance cover limits) to make it worthwhile.
Best for: ATM withdrawals / convenience - draw cash as and when you need it
Worst for: drawing small amounts of money / security
Credit Cards
The card of choice for many people on holiday. The exchange rate is often better than on cash, but the handling fee on transactions is about 2.75% and if you withdraw money form a cash machine you will pay an extra fee of about £1.50 (and may pay interest from the date of withdrawal until it is repaid).
Credit card fraud is on the increase, be extra vigilant in the USA, France and Spain.
Best for: large purchases (if the limits are met, you should get the benefit of S.75 CCA on foriegn purchases too)
Worst for: ATM withdrawals
Foreign Currency
You will usually need at least a small amount of cash (for emergencies and to get you to a cash point). Onlinefx and the post office are the best places to convert cash and 'at the airport' the worst (see our foreign currency page).
Best for: convenience / small purchases
Worst for: security (also, bear in mind that holiday travel insurance companies set upper limits on what they will pay out for stolen cash - usually £200).
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