Cheaper holidays with a flexible friend: Commission and exchange rates may be better by plastic, says Neasa MacErlean

TWO-THIRDS of the people who go abroad this summer will take travellers' cheques with them. Many holidaymakers, however, could save money and effort by using their plastic cards instead.

In a Which? report published last month, the Consumers' Association concluded that the use of debit, credit and charge cards consistently resulted in lower costs.

The Which? researchers concluded: 'Even though charges are made when you use the card abroad, in the end you'll often pay less using a plastic card than you will once you've suffered a poor exchange rate and paid commission on buying and exchanging travellers' cheques.'

Exchange rates on plastic are generally better than travellers' cheque exchange rates which, in turn, are generally better than rates on cash.

Commission on travellers' cheques is usually 1 to 2 per cent in the high street, with a minimum charge of pounds 3 to pounds 5. National Westminster, for example, charges 2 per cent commission on foreign currency travellers' cheques, with a mimimum charge of pounds 4. By comparison, there is a 2.75 per cent commission charge on the NatWest Access card. But NatWest travellers' cheques currently have a French franc exchange rate of 8.26 francs to the pound, compared with an Access exchange rate of Fr8.32.

Despite the cost differentials, the Consumers' Association still recommends that holidaymakers take a supply of cash or travellers' cheques incase the cards are stolen or are not accepted, particularly in remote locations.

When comparing 32 leading banks and building societies for buying foreign currency, Which? found a price variation of 7 per cent between the best and the worst.

The best rates were offered by the Royal Bank of Scotland, Bank of Scotland and Halifax. The worst rates were offered by Norwich and Peterborough Building Society, Northern Rock and Co-operative Bank. Given that the average amount a family spends on a holiday abroad is pounds 600, Mr and Mrs Average could save themselves as much as pounds 40 by going to the Royal Bank of Scotland rather than the Co-op.

The banks are keen to promote the advantages of travellers' cheques. They are welcomed in places where charge cards are regarded as exotic. In many parts of the US dollar travellers' cheques can be used like cash. American Express can provide replacements in less than a day. It also operates a 24- hour helpline, providing an emergency legal and medical referral service for people abroad.

Charging 1 to 2 per cent commission, banks and building societies will collect pounds 15m this year in commission from the 29 million Britons who will travel abroad and collectively order pounds 4bn in travellers' cheques.

Eurocheques are useful on the Continent but less so in the UK. Eurocheque charges are higher than those on travellers' cheques, but they hit the bank account only when the cheque is written and lodged.

(Photograph omitted)