With summer holidays on the horizon, it’s important not to leave your travel money to the last minute.

Frantically changing money at the airport or on a ferry is always a bad idea as you’ll get a worse exchange rate than you would have done with a bit of forward planning.

You don’t have to take cash at all, although having a little of the local currency when you arrive is always pretty handy.

Whichever way you decide to go, here’s how to pay less for your holiday money.

If you want to take foreign currency

Getting your currency from your bank is almost always a terrible idea as the rates on offer are generally poor.

We recently did a survey of online currency bureaux and here are the companies that consistently offered the best rates across a range of currencies:

  • Ace-FX.com;
  • Bestforeignexchange.com;
  • ICE FX;
  • TravelFX.co.uk;
  • Moneycorp.

The one bank that was the exception to the rule was HSBC.

It’s important you shop around and take any fees into account too.

You might also want to consider the ‘buy back rate’, which is what firms will pay to buy back your currency when you get back home.

This is essentially an extra cost to factor in, particularly if you’re not sure how much you’ll spend and how much currency you’ll be bringing back. Try to draw up a budget and stick to it, although you should also have a debit or credit card that doesn’t charge fees as backup.

[Related story: Don't make these six holiday money mistakes]

If you want to use a debit or credit card

Most debit and credit cards charge a fee for foreign transactions, and most debit cards charge a fee for withdrawing cash at an ATM.

If you want a fee-free debit card then you need to open up a current account with Metro Bank (although the free use is limited to Europe only), Norwich & Peterborough Building Society or Cumberland Building Society.

If you don’t fancy opening an account with one of them, it might be worth looking at whether any high street bank has ATMs in the country you’re going to. For example, Santander, being a Spanish bank, has plenty of cashpoints that UK customers can use free of charge.

Alternatively, you could opt for a credit card, although don’t use one to withdraw cash from a cashpoint.

The Halifax Clarity card, Post Office Platinum card, Saga Over-50s card (which is only open to people aged 50 or over) and the aqua Advance card don’t charge fees for overseas usage.

Just make sure you tell your credit card company you’re going abroad, just to ensure they don’t block your card by mistake. And try not to overspend and return home to a huge bill.

Compare credit cards that don't charge for foreign usage

If you want to use a prepaid card

Prepaid cards can be really useful as the good ones give you the flexibility of a debit card without the foreign currency fees. You also can’t overspend so they’re good for keeping you on budget.

Travelex recently caused a stir by launching a prepaid card called the Supercard, which charged no fees for transactions or loading money onto the card. However, once word got out its trial period was massively oversubscribed.

The best of the rest include the ICE Travellers Cashcard, which comes in US dollar and Euro versions. It’s free if you load up more than £700-worth of currency, otherwise there’s a £4.75 fee, and you can earn cashback on purchases.

Meanwhile, the Caxton FX currency cards come in sterling, US dollar and euro versions. There are no fees for purchases or withdrawals but there is a minimum load of £100/$200/€150 respectively.

The Ukash Travel Money card comes in US dollar and euro versions and doesn’t charge any fees, but has a minimum top-up of £50. It does charge a reissue fee after two years though and a fee for closing the card.

Make sure you check for fees before you take out a card.

If you want to use travellers cheques

Travellers cheques are still available but you’ll find it increasingly difficult to cash them in. Many companies don’t offer euro versions anymore so you might have to shop around.

However, they are still useful for the peace of mind they provide.

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