Don't feed the sharks

Italy's good, France is bad, and Greece is definitely dodgy. Lucy Roberts on far your pound will go abroad and the best places to exchange your holiday money

Whether or not you can afford to live the life of Reilly on holiday this year will depend largely on where you are bound. The pound has put in a mixed performance on the international currency markets since last summer, leaving some destinations substantially cheaper but others much dearer.

For example, pounds 500 spent in Italy this year will go almost pounds 50 further than last year. The same money will also buy you an extra $45 in the US. Sadly, visitors to France are looking at an unpalatable Fr7.6 to the pound, a pounds 30 erosion in their pounds 500 spending money.

The best exchange-rate improvement has been against the Turkish lira (pounds 500 last year is now worth pounds 650). But then, Turkish inflation has been running at 125 per cent. And while the drachma has been level with the pound over the past 12 months, Greece has seen inflation of 10 per cent.

When buying currency it is important to remember that charges and exchange rates vary widely. For peace of mind buy currency before you leave the UK, even if you leave it until the last minute.

Exchange rates at BAA airports are pegged at high street bank levels. They guarantee to be able to supply pounds 500 in the top 10 world currencies or will pay $100 compensation.

If buying abroad, good deals can still be had if you shop carefully. Paris, New York and Rome are generally safe if the tourist traps are avoided. You are more likely to get ripped off in Florida, the Greek islands, the Spanish costas and the French rivieras.

When buying currency you will pay commission of 1-3 per cent, with a minimum charge of pounds 1-pounds 3. If you use a eurocheque abroad you will pay commission to the foreign bank that processes it, usually around 1.6 per cent.

If paying with plastic you may get a better rate than changing money at a bank. Card issuers do charge commission, usually 1-2.75 per cent, but this will be buried in the exchange rate shown on your statement.

You can use Visa or MasterCard to get cash anywhere that displays the logo. Most instructions can be viewed in English. Simply key in your PIN number as you do in the UK. A Visa Delta card can be used anywhere a Visa sign is shown. Switch cards can also be used abroad but you will need one that displays either the Maestro or Cirrus logo on the back.

When abroad avoid changing money at your hotel - rates are invariably poor - and the obvious tourist haunts. In Italy, use one of the big banks otherwise you may get stung for a commission charge of up to 6 per cent.

Avoid the "hole in the wall" bureaux de change in Greece. They tend to double as water sport or bicycle hire stores and will rip you off.

In Spain the old 2,000 peseta (pounds 10.50) banknote is being phased out so make sure you are given new notes. If you are stuck with the old version - still legal tender but accepted unwillingly if at all - take it to a main bank.

Some European banks will offer a "no commission" deal. These may not be as good as they look so check the exchange rates. Similarly, most currency dealers now offer commission-free deals when changing money back to sterling. Again, check the exchange rates to ensure you are getting a fair deal.