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Hidden costs of holiday cash

25/06/2008

Consumer groups are warning holidaymakers to watch out for hidden costs when spending abroad this summer.

Which? Money checked the cost of buying $500 at 15 high street outlets that offered commission-free foreign exchange and found costs varied by almost £15 thanks to varying exchange rates.

Martyn Hocking, editor of Which? Money, said: "We often spend ages finding a great value holiday, but then forget about getting the best deal when it comes to our spending money. Don't assume that commission-free means you're getting a good rate - shop around or you could find yourself paying over the odds."

Which? also claims people making purchases on their debit or credit card abroad could face fees of more than £20 if they spend £500 on holiday, as most cards add a foreign exchange loading fee, and debit cards usually add a handling fee for each purchase.

Using your card to withdraw money at cashpoints could also be expensive.

MoneyExpert.com said the cost of withdrawing cash abroad can vary dramatically between providers and urged holidaymakers to check their provider's charges before they travel.

Debit card holders will pay on average an additional £4.12 in charges, and credit card holders £4.33.

Although debit cards are a cheaper method of withdrawing cash abroad than credit cards, some current accounts still charge more than the cheapest credit cards, the website warned.

Sean Gardner of MoneyExpert.com said: "Withdrawing cash from an ATM or over the counter whilst abroad can be the most convenient way of getting hold of your money. It's also safe and simple.

"However, most people will have to pay for the privilege and some will pay considerably more than others. With the pound currently very weak against the Euro, unnecessary fees are the last thing holidaymakers need."

British people abroad will make around 68.93 million cash withdrawals this year, taking out up to £7.1 billion in spending money. In total, card transactions are likely to account for around 50 per cent of all foreign spending with those transactions totalling over £25 billion, the website found.