The banking crisis in Cyprus has struck just as tens of thousands of British holidaymakers are preparing for their trips to the island. Should you stay or go? If you stay, what are your rights? And if you go, how should you cope financially? Simon Calder offers advice

Q: There are thousands of British holidaymakers in Cyprus at present. How will this crisis affect them?

A: Right now it’s uncomfortable for anyone relying upon plastic – because, beginning with the longest bank holiday in history, the retail banking system largely seems to have frozen. People who haven’t brought enough cash with them to Cyprus could find encounter problems – though British-based tour operators may make arrangements for customers to pay for meals, excursions and car rental paying with UK-issued plastic.

Q: For holidaymakers who are booked to travel but no longer want to go - what’s your advice?

A: Don’t cancel. You could well lose some or all of the money you have already paid. I cannot envisage circumstances in which a holiday company or airline would offer refunds so long as Cyprus remains a safe place to travel. It is not inconceivable that some tour operators may offer the chance to switch to a different destination, but they have no obligation to do so. Besides, Cyprus is an excellent destination and, despite the problems, holidays should proceed normally.

Q: What should people do in terms of holiday spending?

A: Take cash. In trading terms Cyprus could, temporarily, be going back to the Stone Age. Given the crisis, merchants – anyone from taxi drivers to restaurant owners – may insist on cash rather than accepting plastic, on the basis that who knows what might happen to money that goes to the bank?

Q: Do you agree with the Foreign Office to “Check with your bank for further information”, and “Take different forms of payment with you to ensure you have access to adequate funds (such as pounds, euros, credit/debit cards)”?

A: No. I followed the Foreign Office recommendation and contacted my (normally helpful) bank, asking for advice for a forthcoming trip to Cyprus. It proved a complete waste of time. They explained the fee for drawing cash from ATMs. When I pointed out that the ATMs might well not be working, I was told: “We can’t really give you advice”. As the conversation continued, they suggested I might want to take travellers’ cheques – perhaps the least useful travel advice I have been offered in years. Cowrie shells or beads might be equally useful.

In terms of the advice about £s, €s and plastic: take euros in cash, and some sterling as back-up, but do not rely on credit or debit cards. Perfectly rationally, a merchant may feel that any money in the bank could either be taxed by Europe or lost entirely if Cyprus goes into financial meltdown. Therefore it could well be that any form of payment that has to be processed through the island's banking system is rejected.

Q: So what is the best way to get euros in cash – and is it safe to carry large sums?

A: You could shop around on the High Street – in a recent sweep I found Thomas Cook offered the best deal. But if you are seeking a substantial wad of cash, then it is better to look online. Home-delivery deals are often good, but it may be more convenient to order online (eg through Travelex, MoneyCorp, American Express or ICE) and pick up the cash at the airport. Another possibility, if you can reach central London: print out the voucher at and get an improved deal at the ICE office opposite Platform 18 at Waterloo station.

Cyprus is a safe country – though as always you should take great care at transport terminals, particularly airports. In crowded areas, never take your eyes off your possessions for a moment.

Q: I am going to the northern part of the island. Will I be affected?

A: Probably not. The self-styled “Turkish Republic of Northern Cyprus”, recognised by no country other than Turkey, runs on the new Turkish lira and is likely to carry on as normal.

Q: If there is a massive run on the Cypriot banks, will holiday firms and airlines be affected?

A: No. It is unlikely that any UK travel company will have large deposits in Cypriot banks. Payments from British holiday firms to Cypriot suppliers – such as hotels and coach companies - are unlikely to be affected.

Q: Tourism is a huge part of the Cypriot economy - how will this affect it?

A: British and Russian holidaymakers together account for a large slab of the tourism industry, and both are pretty immune to crises. Indeed I think there could be some bargains if cancellations begin from other nationalities. I am actively looking for a holiday in May, when there may be some good deals.