Your holiday money

lil eva · Your holiday money

For UK holidaymakers the prospect of travelling to the Continent has lost some of its gloss this year as the pound has hit a record low against the euro.

Gone are the days when the euro was typically worth 67p against the pound seemingly irrespective of the European Central Bank's (ECB) attempts to build its reputation. Now the euro has smashed through the 80p barrier, its highest level since the single currency was first introduced in 1999.

For the millions of British holidaymakers eagerly anticipating the half-term and summer holidays there is understandable disappointment at the weakening pound. This could be compounded by hefty foreign exchange fees and transaction costs so it's crucial to pick the right foreign exchange product whether it is a currency conversion, a credit, debit or prepaid card.

Is plastic fantastic overseas?
With an overseas credit card your first consideration should be the fees and the interest rate. As a result it's often a good idea to have a credit card that you use exclusively for overseas purchases and that you can pay off in full each month.

A credit card with purchase protection for at least 90 days is the best option for overseas spending - this will safeguard any spending against accidental damage, theft and robbery. In addition, look for cards with 0% offers on purchases so you won't pay any interest for that introductory period and watch out for foreign exchange fees in Europe - for more on the fees to lookout for read 'Beware the cost of overseas spending'.

Credit cards tend to offer better rates of conversion than foreign exchange bureaux because you benefit from Visa and MasterCard wholesale rates - if you change your money at a bank or high street bureau de change, you will get a less favourable retail rate.

For example, on Tuesday April 29, Moneysupermarket looked at how much €500 would cost in sterling. We compared rates from a range of banks, specialist currency exchanges, credit cards and prepaid cards and a €500 purchase would have cost you £394.33 if you had used a no-fee credit card.buying that amount from Barclays would have cost £413.09.