Holiday season is looming. While you’re packing your bucket and spade and planning your sun-tanning schedule, it is vital you don’t get fleeced when it comes to your holiday spending money.

The value of the pound against the euro has dropped in recent weeks, meaning those who are heading to Europe will find everything a little bit more expensive.

The pound is currently worth around €1.10, while those heading stateside will find £1 is worth around $1.25. Unfortunately this is the official exchange rate and what you get on your holiday spending money can vary vastly.

You’ll find that ordering in advance will save you money compared to going to exactly the same outlet and buying currency on the day.

First things first, the worst thing you can do is to leave it to the last minute and buy currency at a kiosk in the airport, without ordering ahead. These outlets are knowing for capitalising on the panic purchase and offering far lower rates than most other places. Research from financial website MoneySavingExpert found that buying €1,000 of money could cost you £100 more if you buy at the airport rather than order ahead.

Here’s our guide to the best options:

1   Put it on plastic

A number of cards are now available that will maximise the exchange rate you get on your holiday money and mean that you avoid the ‘foreign transaction charges’ that your usual bank might charge.

Halifax Clarity credit card is one of them; it has no fees on spending abroad and doesn’t have an exchange fee, meaning you get pretty close to the day’s exchange rate when you make a purchase.

It’s a credit card but you can withdraw cash from an ATM on it, although this will accrue interest from the day you make the withdrawal, rather than the end of the month like the other transactions. Make sure you pay it off in full though as it has a 19.9% APR rate.

Another credit card option is from Tandem, which also has no fees and the same deal on withdrawing cash as the Halifax Clarity card. As an added bonus, it gives you 0.5% cashback when you spend more than £1. The catch (for some) is that it’s an app-only bank.

For a debit card option instead, app-only banks Starling and Monzo are good options. Both can be set up easily through their respective apps and don’t charge non-sterling transaction fees or withdrawal fees. Starling limits you to £300 a day in cash withdrawals, while Monzo limits you to £200 in cash withdrawals over 30 days before you’re charged 3% on taking cash out.

If you want a more traditional bank, rather than an app-only version, you can plump for Metro Bank, which has no transaction or withdrawal fees in most European countries, but will charge you a fee if you go outside Europe.

2   Want to get cash?

If you want to get cash ahead of your trip your best bet is to order ahead and collect it. TravelMoneyMax is a good comparison site that will compare rates depending on how much you want to exchange and where you live. You need to make sure that you pay for any money with a debit card or cash, as otherwise it counts as a cash withdrawal on a credit card and you’ll be charged.

However, you won’t get as good rates as the best card options listed above, and you need to make sure you’ve got a safe place to stow the cash.

Another warning is that these bureau de change don’t offer any protection, so if they go bust and have your cash you won’t get the money back. This isn’t an issue if you order online and pay when you collect, but it can be a risk if you order online, pay online and get delivery.

3   Want to lock in the rate?

It’s notoriously hard to predict how exchange rates will move, particularly with the current uncertain political environment. However, if you want to lock in a rate now for fear that it will get worse before you jet off on your annual break, then you can use a pre-paid card.

These work by loading money onto a card, with the exchange rate calculated at the time that you load the money, rather than when you spend it. You can then use the cards like a debit card, to pay on card or withdraw cash.

There are a number of options available. For example, WeSwap will allow you to convert your pounds into lots of major currencies, including euros. It’s free to sign up to and to top up and you get free cash withdrawals as long as you take out £200 or more. You will be charged a fee when you switch your money to a different currency, with the fee staggered depending on how quickly you need to access the cash. If you can wait seven days it’s 1%, while three days is 1.3% and an instant exchange is 2%.

Another option is Caxton, which is free, has free transactions and free ATM use abroad; or Revolut, which allows up to £200 a month to be withdrawn for free, charging 2% after that.

Avoid this sneaky trick

A long-established swindle from card operators is to ask you whether you want to pay in local currency or your home currency, when you’re making a purchase abroad or taking out cash.

If you select to pay in pounds you’ll often get a terrible exchange rate and so be charged far more. Avoid this at all costs, particularly if you’ve gone to all the effort of getting the best card to give you the best rate.

The wording on these transactions can sometimes be confusing, so make sure you read it carefully to ensure you’re paying in the foreign currency.

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