Around 11.3million British people withdrew a total of £3.87 billion in foreign currency while they were on holiday during the last 12 months, according to new research from Sainsbury’s Finance.

But many of these holidaymakers will be caught out by steep credit and debit card fees for overseas use, while others may not have the right prepaid card for them and so risk paying more than they need to.

Whether you prefer to carry cash, plastic or traveller’s cheques, we take a look at how you can get the best deal on your holiday spending money...

Carry the right credit card

If you use any old credit card when you’re abroad, you’ll almost certainly be charged foreign usage fees and get a terrible rate of exchange.

However, there are some credit cards specifically designed for overseas use. These ensure you get a better deal on your holiday spending.

For example, the Halifax Rewards Clarity Credit Card has no fee when you use it anywhere in the world, plus no cash withdrawal fees. On top of that, if you spend at least £300 a month on the card, you’ll earn £5 cashback.

However, you do need to have a Halifax current account in order to qualify. The typical annual percentage rate (APR) is 12.9% and there isn’t a higher rate charged for cash withdrawals, although it will begin charging you interest immediately if you do use an ATM.

If you don’t want to open a Halifax current account, the Halifax Clarity Credit Card is available to everyone and works in exactly the same ways as the Rewards Clarity Credit Card, just with no monthly £5 cashback available.

Next best is the Post Office Platinum Card, which also charges no foreign purchase fees and no commission on your spending, although it has a slightly higher APR of 16.9%.

Pick up the perfect prepaid card

One of the most cost effective ways to spend overseas is with a prepaid card, which you may sometimes hear being incorrectly referred to as ‘prepaid credit cards’.

These allow you to load your card with cash before you go and then use it just like a credit or debit card when you’re abroad. Some allow you to load them with sterling, which is then converted into local currency wherever you use it.

However, the most cost-effective way for most people to use prepaid cards is to load it with the currency they plan to use, meaning you know what rate you’re getting. Most prepaid card providers offer euro, dollar or sterling options.

In order to find the best card for you, have a think about how you intend to use it and how much money you plan to change.

For example, the Caxton Euro Card is free to apply for, use in shops and make withdrawals from international ATMs.

Meanwhile the FairFX Euro Currency Card Special (which comes with a £5 bonus if you load £500 or more, exclusively through is free to apply for and free to use in shops, but charges €1.50 when you make a withdrawal at an ATM.

Which card is right for you depends on how you plan to use it – the FairFX card gives you €112.75 to £100, while Caxton is offering €111.20.

That means that, if you changed £500, you’d get €569.34 with FairFX (including the £5 bonus), but €556 with Caxton.

So, if you plan to make fewer than eight ATM withdrawals with your card, the FairFX gives you the better rate. However, if you plan to make many withdrawals and don’t want to worry about fees, the Caxton deal will give you more spending money.

FairFX also offers sterling and dollar cards that give you a £5 bonus if you change more than £500, while Caxton similarly offers fee-free dollar and sterling cards.

Find the cheapest foreign currency

Never buy your foreign currency at the airport. You’ll pay far in excess of what you need because foreign exchange bureaus know this is your last opportunity to fill your wallet before you fly.

Instead, search online for the best rates and buy your currency before you leave. Taking the time to do your homework and find the best deal can be the difference between being able to afford an extra meal or day out.

Many providers guarantee next day delivery, so you can be sure of getting your cash in time for your flight.

But even if you’ve left it to the night before, you can often order your spending money online and collect it at the airport – for a much better rate than you’d get buying it on the day. Travelex offers this service, although you’ll need to check there’s an outlet at whichever airport you’re flying from.

You can browse foreign currency rates and order traveller’s cheques over at

Carry a mixed wallet

We don’t recommend using any one way in isolation to fund your spending overseas – you should always take a few options with you. For example, if you’re relying on prepaid cards then you want to have some small change in the local currency, for tips, ice creams and other small costs.

Even if you prefer to just take foreign currency with you abroad, it’s a good idea to carry a debit or credit card with you in case of emergencies.

With that in mind, don’t forget to tell your card provider that you’re going abroad, or they may freeze your card and leave you short in an emergency.

Get more bang for your buck

If you want more bang for your buck, then there are other ways to cut the price of your holiday, leaving yourself more cash to spend when you arrive.

Read our article ‘Grab yourself a bargain winter break’ for some tips on finding the best deal on your break.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.