Q.  I will be visiting Palma in July and have booked the hotel independently. I was wondering if you could advise me what would be the most economic way to pay the bill? With euros purchased here, with a debit or credit card, or to draw cash in Palma and pay that way?

Frances Eden

A.  Let me cross off the final option immediately; if you use a UK debit card to draw cash from an ATM in Mallorca, not only will you have no control on the rate you are given, but you will also probably have to pay some rather excessive charges to your card company. I take my debit card abroad only for use as a last resort.

A credit card has the advantages that it is relatively secure (compared with cash) and that you'll get a few weeks' grace before you have to settle the bill for your hotel. The problem is that increasingly many cards come with hefty extra charges for anyone with the temerity to use them abroad; pay a £500 hotel bill in Spain, and your card issuer may help themselves to another £10 - as well as setting the exchange rate to suit themselves. The Consumers' Association has produced a useful guide to the best cards for use abroad: see bit.ly/CCabroad.

The one certain way to keep a lid on extra charges is to obtain the euros in advance in the UK - at the best possible rate. Assuming you are flying to Palma, you could compare rates through a range of providers for the airport you are planning to use, and choose the best deal for paying in advance with a debit card but picking the euros up at the airport; this will work out far cheaper than just walking up to the desk on your departure. You could also consider a home delivery option, or take advantage of ICE's exceptionally good rates at London's Waterloo station (as well as Edinburgh Waverley and Glasgow Central) if you print out the online voucher (bit.ly/ICEvoucher). But also check how much stolen cash your travel insurance policy will cover, in the very unlikely event that you are targeted for theft.

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