AS THE big Scottish holiday season gets under way, overseas budgets will go a lot further than last year thanks to the strong pound.
For every £500 changed, European travellers can expect around £36 more than a year ago, while those heading for the US will be £62 better off.
But to avoid a nasty surprise when bank statements for the holiday arrive, it pays to plan your money tactics in advance. For the first time banks are now being required to show their overseas money charges separately on statements, rather than being merged into the amounts spent, and for many it could be an eye-opener.
Customers of the new TSB, for instance, as well as with Bank of Scotland, face a 2.99 per cent foreign exchange charge for using their debit card for overseas purchases or cash, plus a £1 fee on any purchase, and a 1.5 per cent fee (minimum £2, maximum £4.50) for cash withdrawals.
According to figures prepared by moneycomms.co.uk, based on a two-week holiday with a spend of 20 purchases totalling £1,500 plus five £150 withdrawals, that would add £98.53 to the holiday bill - the highest of 24 banks. Santander is almost as expensive at £98.13. Not far behind are the Cooperative, HSBC and First Direct (£76.87), while Clydesdale (£71.18) has a 3.75 per cent foreign exchange charge on cash but no extra fee.
Better value banks include M&S (£61.88) and Nationwide (£50), while an even cheaper option would be FairFX Anywhere, a prepaid card with a 1.4 per cent charge on both purchases and cash plus £1 per withdrawal, giving a comparable cost of £36.
Andrew Hagger at moneycomms.co.uk says people tend to assume, wrongly, that debit cards are the most cost-effective. "Most banks and building societies charge a non-sterling transaction fee of between 2.75 per cent and 2.99 per cent, so that's almost £3 for every £100 spent, but the charges don't stop there. If you withdraw cash, you'll pay an additional withdrawal fee of around 2 per cent usually with a minimum charge of around £1.50 or £2. Furthermore, if you use your debit card in shops, bars and restaurants some banks will also hit you with a fixed fee of between £1 and £1.50 per debit card purchase, no matter how little you spend in a single transaction. These fees don't sound much in isolation but your charges bill can soon spiral if you make a number of small purchases."
Credit cards offer a better option. While Halifax's debit card is among the most expensive to use abroad, its Clarity credit card is the cheapest, with no fees on purchases or cash, and no current account needed.
Mr Hagger says: " Halifax Clarity is unique in that it doesn't charge a non-sterling transaction fee (typically 2.75per cent or 2.99 per cent) or an ATM withdrawal fee (usually around 1.5 per cent to 2per cent). The only cost is interest at 12.9 per cent so if you withdrew £400 for example and repaid it after 30 days the total cost would be £4.24 - and even cheaper if you are able to pay it off sooner. For overseas purchases there are no additional costs if you repay your next statement in full."
The only other bargains to be had are credit cards from the Post Office, Saga (over-50s only) and Nationwide (current account customers) which levy an ATM fee but no foreign exchange charge. Using the same holiday spending scenario, the holiday cash cost would be £15 to £18.75. That jumps to £67.27 with Barclaycard and to over £80 with all other cards, the priciest being Virgin Money, Asda and the AA, whose cards have a minimum ATM fee of £5 per withdrawal.
Opening a current account with building societies the Coventry (for debit cards), the Norwich & Peterborough (credit card) or the Nationwide (both) could be an option. Mr Hagger says: "It's probably too much to ask people to switch bank accounts to get a low-cost debit card, although if you are a frequent traveller overseas - perhaps if you have a holiday home or family overseas - then it may be worth considering. I would recommend applying for a credit card that you purely keep for overseas use. "
He adds: "At least if you understand the overseas charges, you can adapt your spending pattern accordingly - for example, you don't want to be making cash withdrawals or purchases of £10 or £20 if you're going to be hit with charges of £1.50 plus each time. A prepaid currency card is a cheaper plastic travel companion."
David Black at Consumer Intelligence suggests Caxtonfx and UKcash, which don't charge fees for purchases or ATM withdrawals, and FairFX which charges 1.5 euros or $2 for withdrawals. Mr Hagger adds the MyTravel cash card.
Prepaid currency cards can be loaded online from your debit card with the exchange rate locked in, though among the 35 providers there are many with a welter of fees and charges to beware of.
Ukash this week launched what it claims is the best-value prepaid currency card. Available in euros and dollars, it has no sign-up, transaction or ATM withdrawal fees.