Pre-paid currency cards are a cheaper alternative to credit and debit cards

Most banks add a foreign usage fee to all credit card cash and purchase transactions

(EPA)

With thousands of winter holidaymakers heading for the ski slopes in the coming weeks, here's a reminder of the charges you could face when using your plastic abroad.

Debit and credit cards can be a cheap and convenient way to pay in the UK, but the fees overseas mean it's worth finding a lower-cost alternative before you travel.

Pre-paid currency cards from Centtrip, Cash Passport, Caxton FX and myTravelCash are among the most competitive, according to my recent research, and the savings make it worth packing a specialist travel card.

Most banks add a foreign usage fee to all credit card cash and purchase transactions. In most cases it's 2.75 per cent to 2.99 per cent. And on top of the usage fee, an ATM withdrawal will cost you around an extra 3 per cent.

If you do want to take your plastic when you travel abroad, consider MBNA Everyday Plus or Halifax Clarity as neither charges an overseas mark-up or ATM fees.

Debit cards can also be expensive when used abroad and it's something that holidaymakers sometimes overlook, until the charges are debited from their account.

There is an ATM withdrawal charge, typically between £1.50 and £5.00, and then a usage fee of 2.75 per cent to 2.99 per cent again for purchases, plus up to an additional £1.50 per transaction regardless of the amount.

The most expensive debit cards are Halifax (£1.50 per purchases), Santander (£1.25), and Lloyds and TSB (both £1).

If you're looking for a fee-free debit card for use abroad, you'll need to open a current account with Norwich & Peterborough building society or Metro bank.

Check the costs of your plastic with your bank before you set off, rather than getting a nasty shock when you return. At least if you understand the overseas charges, you can adapt your spending accordingly.

For example, why make cash withdrawals or purchases of £10 or £20, if you're going to have to pay another £1.50 or more each time?

Meanwhile, if you spent the equivalent of £1,500 including three £200 ATM withdrawals and nine purchase transactions, it would set you back less than £19 with a pre-paid currency card from Cash Passport or myTravelCash; using a debit card from TSB or Lloyds would cost £62.85 .

Pre-paid cards have chip and PIN security, are accepted wherever you see the MasterCard symbol and are way cheaper than most debit and credit cards.

A sterling pre-paid currency card can be loaded from your debit card, and as such the exchange rate is locked in at the time the cash is transferred to the card. So you'll know exactly what you'll be paying for all your holiday transactions.

A final warning: whatever type of plastic you use overseas, beware of an increasingly common custom (particularly in Europe) where the retailer or ATM gives you the option to pay in pounds sterling, known as "dynamic currency conversion" (DCC).

Although you know exactly how much you'll be debited, the downside is that it gives the retailer the opportunity to use an uncompetitive and costly exchange rate.

The golden rule for holidaymakers is never to pay in British pounds.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk