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Who gives the best deal on buying foreign currency? We did a snapshot survey of providers in London on Monday this week, and discovered that the promise of "commission free" transactions does not guarantee a good deal.

Who gives the best deal on buying foreign currency? We did a snapshot survey of providers in London on Monday this week, and discovered that the promise of "commission free" transactions does not guarantee a good deal.

In the survey of numerous currency providers, the same question was asked: "How much would it cost, in sterling, to buy €300?"

With an interbank rate of around €1.49=£1 that day, the answer was sure to be slightly above £200. But the question was, by how much?

The most expensive holiday money came from NatWest (£12.41 on top of the £200), though this figure would have been reduced by around £4 for the bank's account holders. The cashier recommended trying Marks & Spencer or the Post Office, "because they sell it commission-free".

The absence of a commission charge is an attractive idea, but is most useful for very small transactions - for example if you have a long-haul flight via a European airport and want a modest amount for food and drink during the transit stop. But on bigger transactions the benefit can rapidly vanish because of less favourable rates. And so it proved: the Post Office was the third-most expensive, at £9.63 over the £200 mark, while M&S was far from cheapest at £6.90. Two specialist bureaux de change were pricey: TTT at £9.10, and Interchange at £10.

The cheapest major company in the survey was Thomas Cook, at £6.04 above the £200 mark. But Thomas Exchange (no relation to Thomas Cook) in Maddox Street, a side-street off Regent Street, offered by far the best deal: just £3.72 over £200 would buy €300, representing slightly better than €1.47 to each £1. And by Thursday, the rate had improved still further, with only £202.70 needed to buy €300.

Thomas Exchange: 020-7493 1300; www.thomasexchange.co.uk

n Two competing companies are seeking to bring the 19th-century traveller's- cheque concept into the 21st century. American Express and the foreign-exchange specialist ICE are launching rival plastic cards that are said to have the security advantages of the traveller's cheque with the flexibility of credit or debit cards.

The idea behind Amex's Travellers Cheque Card and ICE's Cash2Go is that you choose to "load" the card with between £50 and £3,000 in sterling, dollars or euros. You then use the card to withdraw currency from ATMs abroad, or to pay for purchases with the card in the same manner as a credit or debit card.

The card is PIN protected, which means that if it is lost or stolen, no one else should be able to access your funds. But these pre-paid cards look expensive. Cash2Go costs £5 initially - or one per cent of the amount loaded, whichever is the higher, and each ATM withdrawal incurs a charge of £1.75.

The cards also lack the flexibility of credit or debit cards. Amex, for example, warns that you cannot use its Travellers Cheque Card for quite a wide range of services, including "some inflight purchases"; "when checking into a hotel/motel"; or when paying for "escort agencies, introduction services or massage parlours".

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