A few dollars more, or a fistful of fees?

Steve Lodge on the best - and worst - places to buy foreign money

Marks & Spencer is the unlikely "best-buy" for foreign currency this summer, according to a survey by the Independent on Sunday. Thomas Cook comes out worst and the big banks also give generally poorer deals, although Royal Bank of Scotland is surprisingly competitive.

The table shows how much foreign currency someone could have bought with pounds 500 from a range of banks and bureaux de change on the same day last week. Changers could have got up to about 3 per cent more currency - after all charges - from Marks & Spencer than from the worst of the banks and other companies surveyed - equivalent, for example, to 23 US dollars or 134 French francs on pounds 500.

The results confirm the findings of previous surveys - Marks & Spencer was the IoS best-buy last year while Royal Bank of Scotland, along with Bank of Scotland, is named by this month's Which? magazine as a best-buy. Likewise the main banks and Thomas Cook came out badly in the IoS survey last year.

Part of the reason for M&S's top position is its lack of commission or other charges, which also means that for smaller amounts than pounds 500 it would compare even better with the main banks and other companies surveyed. Equally, however, foreign currency buyers should not assume all commission-free offers will be good deals overall; no commission may be offset by poor exchange rates in some cases.

The trouble with M&S is that it only has a handful of branches that sell foreign currency, which in London include Marble Arch, further down Oxford Street near Oxford Circus and at High Street Kensington. Two M&S branches are listed in the table because separate companies run their bureaux de change, giving slightly different rates.

Similarly, while Royal Bank of Scotland is reasonably well represented in central London, it has relatively few branches in the south of England.

Apart from these two - which may not be convenient for everybody - Abbey National also looks a better bet than the main banks in our survey.

It is important to note, however, that the figures in the table are just a snapshot - neither the comparisons nor the rates will necessarily last - and it may be worth shopping around. Banks generally claim their branches all have the same rates but anecdotal evidence suggests this is not always the case, and Thomas Cook branches have been known to match other local deals if asked. Furthermore, this month's Which? magazine recommends changing on the high street rather than waiting until you get to the ferry or airport.

Many people going on holiday may want just a small amount of currency to tide them over when they first arrive in a foreign country, however. For them the absolute savings from shopping around may be small, even if the effect of some banks' minimum charges could be to make the overall exchange rate very poor. For example, as well as a pounds 1.25 minimum commission charge, Abbey National has a fixed pounds 2 handling charge on all exchanges.

Using a credit card to pay for holiday spending often gives you a better deal than getting currency, and withdrawing currency from a local cashpoint machine can be a convenient and competitive alternative to changing before you go. But obviously you need to know whether cards will be acceptable at your destination. Visa's free 1997 Holiday Money Guide gives some guidance - call 0171 231 5432 for a copy.

Different credit and cashpoint cards give different deals. Credit card exchange rates vary, and if you do have the choice of Visa or Mastercard from the same institution, it is often better to use Mastercard - its underlying rates are better than Visa's. For those putting a lot of spending on their credit card, it may be worth getting a credit card from Frizzell Bank (0800 3731910) - its rates are the keenest on any card although there is an annual fee of pounds 11.

Cashpoint cards also have different exchange rates and will normally charge around pounds 1.50 upwards for withdrawals. The charge will typically appear separately on your bank statement. Alternatively you can withdraw money on a credit card (for which you will need a Pin number), which will incur a similar fee or interest on the cash "advance".

Research by Deborah Postigo.

SHOPPING FOR CURRENCY - WHAT pounds 500 WILL GIVE YOU

Bank or Firm Dollars Francs Lire Pesetas Commission (minimum)

Abbey National 787 4,552 N/A 113,669 1.5% (pounds 1.25)

Alliance & Leicester 781 4,528 1,325,000 113,223 1.5%(None) American Express 780 4,547 1,326,000 113,888 1% (pounds 2)

Barclays Bank 779 4,500 1,328,000 112,942 2% (pounds 3)

Halifax 782 4,546 1,324,000 113,741 1.5% (pounds 3)

Lloyds Bank 777 4,515 1,320,000 112,991 2% (pounds 3) Marks & Spencer

Marble .Arch, London 799 4,620 1,355,000 115,385 None

Oxford Circus, London 798 4,634 1,350,000 115,000 None

Midland Bank 780 4,525 1,324,000 113,074 2% (pounds 3)

Post Office Counters 787 4,541 1,332,000 113,823 1% (pounds 3.50)

Royal Bank of Scotland 786 4,560 1,340,000 114,135 1.5%(pounds 2)

Thomas Cook 776 4,500 1,317,000 112,519 2% (pounds 3)

Rates as at 12 June. Research by Deborah Postigo