Make sure you pack these holiday money essentials

Deck chairMillions of us will be jetting off on foreign summer holidays over the coming weeks.

As well as making sure you've got the right clothing for your trip, you should also take some time to make sure you've packed some other essentials. These include a suitable travel insurance policy, a credit, debit or pre-paid card that doesn't cost the earth and a European Health Insurance Card (if you're heading to Europe).

Top travel insurance
Remarkably, one in four Brits that get into trouble abroad don't have travel insurance. Frankly, this is crazy, as it's easy to find great cover at competitive prices.

The trick is never to buy travel insurance from travel agents or tour operators, whose policies can cost several times as much as the best buys. By shopping around for single- or multi-trip travel insurance, you should be able to find five-star cover for far less than you think. If you think you might go abroad more than once over the next 12 months, a multi-trip policy is generally cheaper. Don't leave home without it.

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Inexpensive holiday money
Finding the right provider for foreign currency can be like crossing a minefield. Choosing the wrong supplier can reduce what you get for your money by 5% to 10%.

When choosing where to get your travel cash, you need to weigh up a bewildering array of costs, including varying exchange rates, commission fees, delivery charges, card charges and so on. Having conducted many currency surveys over the past decade, I have found ordering online for later collection to be the cheapest route, as this avoids delivery charges.

In the past, we've found these providers offer consistently good value for money: ICE (branches across London), Moneycorp, Asda and Travelex (its website only, not bureaux de change).

Don't buy your money at the airport as you'll get an inferior exchange rate and you will probably have to pay high fees.

The correct card
It's almost always a big mistake to take your everyday debit or credit card abroad for overseas spending. This is because all but a handful of cards charge steep fees for processing payments in foreign currencies (typically 3% of the transaction value) and for cash withdrawals overseas.

Taking the wrong plastic on holiday could mean paying surcharges exceeding 5% of the cost of your goods. In effect, this adds £50 to every £1,000 you spend.

If you want to take a debit card, Metro Bank and Norwich & Peterborough offer bank accounts with debit cards that offer fee-free withdrawals and purchases abroad. Some high street banks, such as Barclays and Santander, do offer fee-free withdrawals in certain countries (for example there's no charge for Santander customers to withdraw cash from Santander ATMs in Spain). Check with your bank before you travel.

Meanwhile, if you prefer a credit card for its added protection, the following are all good options as they don't charge fees on overseas purchases: *Only available to new and existing current account customers

If you have a less than perfect credit rating, the Aqua Advance MasterCard could be a good option, although at 34.9% you'll pay hefty interest charges if you don't pay off your balance in full.

Or if you're aged 50 or over, you might go for the Saga Over 50s Platinum Visa.

Try to avoid withdrawing money from ATMs or buying currency using your credit card on your holidays as most cards start charging you interest from the moment the money's in your hands.

If you prefer to withdraw money from an ATM so you know exactly how much you're spending, you might want to opt for a pre-paid card.

These cards allow you to 'load' money onto them, which you can then withdraw later from cashpoints.

The ICE Travellers Cashcard Euro and dollar versions are good options if you're heading to the Eurozone or US. They're free to use and pay you 1% cashback on your spending. The exchange rate is slightly lower than some of its competitors, but it might be a price worth paying if you want the convenience of being able to withdraw smaller amounts of cash as and when you like with no fees.

For other destinations, the Caxton FX Global Traveller only charges a 'mark-up' on foreign transactions. However, you might be better off with one of the credit cards listed above, particularly if you don't plan to spend much hard cash.

An EHIC (Europe only)
There's a lot of confusion surrounding the European Health Insurance Card (EHIC).

Basically, carrying one means you're entitled to healthcare on the same basis as the locals in whatever country you're in. But this is the 'basic level of state healthcare', and as each country's healthcare system varies, your EHIC may not cover all your costs.

You can use your card anywhere within the 'European Economic Area'; so that's all the countries in the EU plus Iceland, Norway, Liechtenstein and it also applies in Switzerland. You can find a full country guide on the NHS website.

Despite the name, an EHIC is no substitute for travel insurance, and it's not a passport to free on tap medical treatment either; in fact in some countries you may need to fork out up front for treatment or at least make a contribution towards any costs.

Make sure you apply for one on the official EHIC website. There are some commercial websites out there charging fees of around £9.99 a time to supply them, which is a complete con as they are absolutely free!

Happy holidays!

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