Holiday Money: Play your cards right on holiday

Access, Visa, Eurocard - which offers the best deal abroad? By Stephen Spurdon

The excitement of taking a holiday usually means we do not think any further than tripping off to the bank or building society for foreign currency and travellers' cheques, confident that Visa or Access cards will pay for the odd present or meal.

There are, however, alternative ways of paying for that all-important spending spree abroad.

Those holidaying in Europe and looking for an alternative to credit cards can use Eurocheques instead. For a fee, you can obtain a Eurocheque guarantee card with the EC logo on it and a cheque book that allows you to write cheques in local currency against your UK current account.

Eurocheques can be used throughout Europe, and the guarantee cards can usually be used as debit cards and to make withdrawals in local currency from cashpoint machines.

This should be thought of as part of your holiday finance alongside travellers cheques, foreign currency and credit cards.

As can be seen from the table below, however, Eurocard charges vary. The Royal Bank of Scotland Eurocard appears expensive at pounds 12, but is for two years, so it actually costs pounds 6 a year.

On the same basis, Lloyds card is cheapest at pounds 4.50 a year. Cost per transaction is usually 2 per cent, with NatWest charging the highest rate shown at 2.25 per cent.

The minimum cost per transaction, however, is worth watching as well: the Midland's pounds 1 minimum being the least. Royal Bank of Scotland is the only one to mention a maximum charge, which in its case is pounds 4.

In France, however, an alternative method of payment should be taken, says Lloyds bank, as Eurocheque encashment by French banks is limited.

One of the bugbears of using standard credit cards abroad is the unpleasant discovery that sudden currency exchange rate movements mean the lederhosen that seemed a bargain in Berlin are no longer cheap because the Deutschmark has risen massively against the pound.

In foreign exchange markets, currency transaction rates for credit cards are set by Mastercard and Visa and the same rates apply to every card issuer.

It is important to realise that the card issuer has also loaded on a further charge - commission levied on the currency exchange itself.

This means you might pay more than you should if you use the wrong card abroad. For instance, Barclaycard charges 2.65 per cent, Midland 3.25 per cent and NatWest 2.75 per cent.

Credit cards from Frizzell Bank do not impose this extra charge. This bank is part of the Frizzell group of companies, which is mainly known for its activities as an insurance broker and is now owned by Liverpool Victoria friendly society.

You do not have to be a client of the bank to get the cards and the charge of pounds 11 a year includes both Visa and Mastercard versions. The current APR is 16.1 per cent .

Taking a charge of around 2.5 per cent for currency exchange, if you spend pounds 400 on a holiday using Frizzell cards, you will have saved pounds 10, itself nearly the equivalent of the annual charge. Bear in mind that many other card issuers also levy an annual charge.

Des Benjamin, director of customer services at Frizzell Bank, says: "We have retired people taking long holidays abroad who load their cards up with cash from a deposit account. We pay 3 per cent on credit balances. So you have easy access to cash and the facility to get local currency from a cashpoint machine.

"We have the standard 1.5 per cent cash charge for such transactions. People can also arrange to pay off the entire balance by direct debit from their current account in the UK."

This could be useful if, for instance, you are planning a longer trip.

SELECTION OF EUROCHEQUES COSTS AND RATES

Bank Cost of card Cost per transaction

Barclays pounds 8 a year 2%. Minimum pounds 1.75 for ATM,

pounds 2 for cheque

Lloyds pounds 9 for two years 2.5%. Minimum pounds 2

Midland pounds 7.50 a year 2%. Minimum pounds 1

NatWest pounds 8 a year 2.25%. Minimum pounds 1.50

Royal Bank

of Scotland pounds 12 for two years 2%. Minimum pounds 1.75, Maximum pounds 4