Brits on right side of the dodgy drachma: In the second of a series on handling holiday funds, Andrew Bibby journeys among the cash machines of Greece

HOLIDAYMAKERS in Crete and the Aegean on 23 May had the unexpected experience of being shaken by an earthquake. Visitors to Greece in the next few weeks may encounter seismological rumbles of a financial kind, as the country struggles to avoid devaluation of the drachma.

The drachma's problems, which started when Andreas Papandreou's government lifted controls on capital movements last month, have led to extremely high short- term interest rates.

For once, British tourists are on the right side of a currency crisis. Although the Greek government claims that the devaluation danger has passed, holidaymakers will be well-advised not to exchange their money into drachmas until they need the cash.

Credit cards are accepted in the tourist areas of Greece. As in Spain (see last week), Visa has the edge over MasterCard/Access. Visa says its cards can be used in Greece in 486 cash machines and over the counter in 1,000-plus banks. MasterCard has 285 cash machines linked up.

Canny cardholders will use the plastic to pay for goods and services where possible, rather than draw money. Most credit and debit card issuers make an additional 1.5 per cent handling fee for cash advances, usually levying a minimum of pounds 1.50 for small amounts. The Co-operative Bank's 2 per cent fee is even steeper. Clydesdale, National & Provincial, Royal Bank of Scotland and the new GM card from HFC Bank impose no fee for cash advances, instead charging interest from the day of the transaction.

Another way of paying for goods or obtaining money in Greece is by EuroCheque - most, though not all, British EuroCheque cards work in the MasterCard cash machine network there. EuroCheque can be an expensive option, taking into account the annual fee (typically pounds 7- pounds 9), commission charges and exchange rate transactions.

Midland and NatWest cash cards, provided they are Cirrus branded, work in the same 285 cash machines as MasterCard and EuroCheque, but again charges are high. NatWest charges 2.25 per cent (minimum pounds 1.50) plus its own currency commission - a shamefully high figure given that no element of credit is involved.

Both NatWest and Midland cards will eventually also work in shops equipped with the Maestro electronic point-of-sale terminals. The Maestro network is due to go live in Greece in mid-August.

Many visitors to Greece, particularly those making for the less popular islands or the remoter parts of the mainland, may want to take travellers' cheques as well as plastic. Banks in Greece normally open only from 8am to 2pm, although those in tourist areas will sometimes open later.

Given the present volatility of the drachma, holidaymakers should check the exchange rate being offered before cashing sterling travellers' cheques - especially in the hotel or the local bar.

American Express clearly beats Thomas Cook this year, with a standard 1 per cent commission for sterling (and, incidentally, also foreign currency) travellers' cheques, no minimum payment and no subsequent buy-back charges. Thomas Cook's standard rate is 1 per cent for sterling cheques, 2 per cent for foreign currency cheques, with a minimum pounds 3.50 charge. To benefit from Amex's rates, the cheques must be bought from one of their offices - it has about 60 in Britain. Ideally, Amex cheques are best cashed in their own offices to avoid local bank commission. Apart from Athens, there are offices in Corfu, Mykonos, Patras, Rhodes, Salonica, Santorini, Skiathos, Aghios Nicolaos and Heraklion.

Travellers' cheques bought from banks and building societies tend to be more expensive - Abbey National and Barclays are charging 1.5 per cent commission, for example. Minimum charges and handling fees, levied chiefly by building societies, also add to the cost. Coventry Building Society is a welcome exception, charging a 1 per cent commission for sterling cheques, with no minimum or additional charges.

(Photograph omitted)