Plastic travels happily

Using your ordinary bank card may give you the best deal when it comes to holiday money, says John Andrew

How do you buy your foreign currency? Some 70 per cent of travellers do it on the day they set off, according to research. Of this group, 50 per cent make their purchases at airports, where the mark-up is 3 to 7 per cent. This compares to 2 to 4 per cent at banks, which itself is double the 1 to 2 per cent paid from obtaining currency from a cash machine at your destination.

The days when spending abroad had to be in the form of traveller's cheques have long gone. However, the British have been slower at using debit cards in shops and in cash machines abroad.

Just under 40 per cent of those in the survey, by Europay International, did not know that the Maestro logo on the back of Switch cards enabled them to pay for goods and services abroad direct from their current account. Likewise, 34 per cent were not aware that the Cirrus logo, also found on the reverse of the cards, gave them access to local currency from 90 per cent of European cash machines - using the same card and personal identification number as they use at home.

There are two debit/cash card networks: Maestro/Cirrus and Visa Delta. Cards with the Maestro symbol may be used as a debit card at 1.3 million outlets displaying the Maestro logo. However, although Maestro is becoming widely accepted in top European tourist destinations, and its acceptance is increasing in North America, they are not usable everywhere; off the beaten track you may have problems. But 90 per cent of Spanish petrol stations now accept cards bearing the Maestro symbol. The linked Cirrus network has more than 316,000 cash machines worldwide. Holders of Visa Delta cards may use their plastic in some 320,000 cash machines worldwide which display the Visa Plus sign. Check with your card issuer first on the availability of machines in your chosen destination.

Using plastic can compare very favourably with using traveller's cheques. The main banks now charge 1-2 per cent when issuing cheques, though it is possible to pay only 1 per cent at the smaller building societies. But when they are cashed at your destination, you will be paying a further charge, either in the form of an unfavourable exchange rate, or a more competitive rate plus a commission.

At some destinations, hotels charge up to 11 per cent for changing your cheques into currency, so do shop around, and remember that banks generally offer the better deal.

When using plastic you benefit from the bulk dealing discounts obtained by the card companies. So, despite the fact that they load the rates with a profit margin and typically charge 1.5 per cent for a cash advance, obtaining cash or paying for goods and services with a card normally works out cheaper than traveller's cheques.

As a rough guide, the cost of changing pounds 500 into foreign currency in the UK, or buying pounds 500 in traveller's cheques in the UK for exchange abroad, is pounds 528. Using a credit or debit card for making purchases of pounds 500 abroad will cost around pounds 511, while obtaining pounds 500 cash with cards abroad will cost about pounds 516n

Card cautions

If you intend to use plastic, there are some points to remember:

l If you are planning to use cards linked to your current account, do ensure that you have adequate funds, plus a margin for emergencies. It makes sense to arrange an overdraft "in case of need" before your departure.

l Couples should remember that with joint accounts, reporting one card missing generally cancels both. It is therefore sensible to have back- up cards.

l It makes sense, if you are an independent traveller, to raise your card limit. It is not unusual for some hotels to get authorisation from your credit card company for a specific amount immediately after you check in. Luxury hotels will err on the side of caution and consider you to be "big spenders". This could make a large dent in your availability on the card, and cause embarrassment.

l Finally, keep details of "hot line" numbers to ring, should any card go missing.