The first few minutes after you arrive in your holiday destination are generally spent scrabbling around for your passport, struggling with your suitcase and finding the loo. All tiresome enough without having to join the long queue for the bureau de change. It is certainly useful to have some local cash for taxi fares and your first holiday drink, but where is the best place to change it?
The most important thing to remember when buying your holiday currency is to shop around.
First check to see if you are eligible for commission-free deals - some bank accounts, like Yorkshire Bank current account and ones for which you pay a monthly fee (like the Royal Bank of Scotland's, Royalties and Co-operative Bank's Privilege) offer commission-free travel money as an extra to customers.
Members of a number of regional building societies, including Leeds & Holbeck, Newcastle, Darlington and West Bromwich (privileged members only), can also benefit from commission-free deals.
Preferential rates are also available to particular customers. For example, NatWest and HSBC offer special deals to students and graduates. Holiday retailer Thomas Cook offers commission-free travel money with a minimum £200 spend on a Thomas Cook credit card or if you spend over £200 on a Thomas Cook holiday.
It is important to ensure you take the whole cost into account - some commission rates may be lower, but the exchange rate higher and vice versa.
A survey by personal finance data provider Moneyfacts this month showed that the Post Office, Halifax, Leeds & Holbeck, Lloyds TSB, Marks & Spencer and Bank of Scotland provide foreign currency without charge.
Even though deals may be commission-free, you should also watch for handling charges. These are typically £3, but they can be more. For example, the Darlington building society charges no commission for its foreign currency service, but its handling charge is £5.
A few outlets will deliver your money to you, although you are likely to be charged between £2.95 and £5 on top of the commission or handling charges. Best for having your money delivered are Lloyds TSB at £2.95 and Barclays Bank and Co-operative Bank at £3.50 - deals are available to everyone. For Marks & Spencer account cardholders, the £5 fee for home delivery is waived if you order over £500 worth.
Most companies can deliver the next day if you order in the morning. They usually use Royal Mail's special delivery service, so someone has to be in to sign for the parcel. If not, it gets taken back to the sorting office, which could be inconvenient. Some companies will deliver to your work, or another address, which might be more useful.
Alternatively the Post Office offers a service where you can order by phone or online and it will deliver your money to any of its branches within four working days. Marks & Spencer and Halifax offer an online ordering facility for customers only and Citibank offers commission-free online ordering for a flat fee of £5 with a guaranteed next-day delivery.
You should also check whether unused currency can be changed back free of commission at the end of your holiday. Tesco, Lloyds TSB and Barclays currently offer this feature. Otherwise you are paying twice. Remember to keep hold of any receipts you are given when buying your holiday money, as you'll need proof of purchase for buyback.
Before deciding how much holiday cash to take, check how much your travel insurance policy will cover for lost money. Most cover between £200 and £300.
Plastic is a convenient way of managing your holiday spending. Credit cards Visa and Mastercard can be used in shops and restaurants and to withdraw money from cash machines the world over.
But using a credit card abroad can be quite costly once you've taken into account the hidden charges being incorporated into your transactions. The first charge your card provider will hit you with is for making a cash withdrawal either at a cash machine or over the counter overseas - this is usually around 1.5% for each transaction.
The transaction may also be treated as a cash advance and you will be charged interest at credit card rates from the day you withdraw the money, losing the interest-free period you usually enjoy on card purchases. Check what your credit card issuer charges - and try to restrict hole-in-the-wall transactions to emergencies. The same problem arises when using your credit card to buy foreign currency in the UK. The transaction will be treated as a cash advance, which means you may get no interest-free period and be stung by a handling fee on top of any commission you pay.
The second charge is for foreign usage, which is typically around 2.75%. This is a commission that your card issuer charges when you buy something abroad. So if you are buying something worth £100, using the credit card to do this could add £2.75 to the cost. A handful of credit cards do not charge commission on the exchange rate. They are those issued by Nationwide, Frizzell Bank, Liverpool Victoria and Saga cards.
Remember to keep an eye on your card abroad and check the receipt carefully before you sign. Also check your credit card statements when you return home to ensure you can account for each transaction, as fraud is not unknown. Loss or theft is a more common danger. You should keep a separate note of the emergency telephone number to call if your credit card goes missing.
