Should I take cash with me on holiday?

The world of travel money is notoriously difficult to negotiate. Do you take money with or change there? Do you take cash, card or cheque?

Luckily as travel becomes more commonplace so the options seem to expand. These days many card providers have cut their fees, credit cards especially for travel are available, and you can even get your hands on preloaded cards, so what's the best option?

We explain how prepaid card works in the video, or read ahead to learn more about taking cash on holiday.

What to look out for

Whilst cash is certainly an option there is always the risk of it being stolen. If you do opt for cash make sure you get your money before you travel as exchange rates are likely to be preferable. It's also a good idea to exchange before you get to the airport, and to exchange cash rather than by card to avoid fees.

If you're looking for a specialised travel card on the other hand there are a few things to be aware of. First off is the infamous loading fee, or exchange rate fee levied by many cards whenever you make a withdrawal overseas.

The best travel cards won't include a foreign loading fee at all, making them that much more attractive. However, you also have to be aware of withdrawal fees. Some cards charge you for the exchange rate and charge you for overseas withdrawals, which are the worst of both worlds.

You should particularly be aware of withdrawal fees with a credit card. Most credit cards have an automatic withdrawal fee but specialised travel cards may not. Read up on how to use a credit card abroad before you travel.

Debit and Prepaid cards

Don't think that debit cards are better though. Some debit cards which offer free withdrawals in the UK charge for both withdrawals and charge a loading fee for using them overseas.

Although some debit cards do exist which are suitable for use overseas they are few and far between so you may have to switch bank to get your hands on them.

Prepaid cards on the other hand are easy to get your hands on and should be considered if you can't get one of the credit cards designed for travel due to your credit rating.

With prepaid cards be aware that they may not be accepted everywhere and, if you don't use the money loaded on them, you may lose what you put on if you leave things too long.

On the plus side there are many good deals available. Again, watch out for loading and withdrawal fees.

I'm going on holiday for 2 weeks. My friends are all taking cash with them but I'm reluctant to do this in case I lose it – what are my other options?

There are a number of options including travellers’ cheques, credit cards, prepaid cards and debit cards. You are right to think that cash is a more risky option, as it will be easy to lose. Whatever option you choose, make sure that you keep all valuables, including cards and wallet, in your hotel safe whenever you are not using them. If you are using a credit card, choose one that does not make extra charges for using it abroad, and remember to choose the option to pay in the local currency, as you will receive a better foreign exchange rate.

Read more...

• Get the best euro exchange rate on a credit card

• No foreign transaction fee credit cards

• Prepaid cards