How should I pay for Bali holiday?

Have a question? Ask our expert Simon Calder

The Indonesian island has a lively currency-exchange market at more competitive rates than found in the UK (Getty)

Q We holiday in Bali frequently, visiting the same hotel, generally by package. This time I have booked directly. What is the best way to settle the accommodation costs: buying local currency in Bali, buying Indonesian rupiah in the UK, or paying by credit card? If a credit card, should I pay in rupiah or pounds sterling?

David B

A I imagine you have found a significantly better deal buying the flights and the hotel separately, and I trust it is good enough to justify surrendering the gold-plated rights that come with buying a proper package holiday.

As you will know from your previous visits to Bali, there is a lively currency-exchange market at very competitive rates – certainly far better than you would ever find in the UK. So forget buying your rupiah in Britain. It therefore becomes a choice between a credit card and cash.

Assuming you have a credit card such as Halifax Clarity which has no foreign transaction fees, then all other things being equal I would recommend paying with plastic; it reduces security concerns about taking a lot of cash. Incidentally, bever accept the offer of “direct currency conversion”, in which you are invited to pay in sterling rather than local currency. It is always at a lousy rate of exchange.

Before you settle on plastic, though, I am not sure that all things will be equal. Some hotels and other businesses in Indonesia apply a surcharge of 2 or 3 per cent on credit cards to cover handling charges justifying them by saying that firms with no such fee are overcharging customers.

I suggest you talk to the hotel about its policy. If it has a surcharge, take cash (clean notes, mostly £20s) and shop around for the best deal for changing them to rupiah. Rates are slightly keener for US dollars, but not so advantageous that it is worth changing sterling to American currency in advance.

Every day our travel correspondent Simon Calder tackles a reader’s question. Just email yours to s@hols.tv or tweet @simoncalder