Holidaymakers could be overpaying by more than £20 per €100 when exchanging their travel money the wrong way this summer, MoneySavingExpert analysis reveals.

If you're lucky enough to be heading away, it pays to understand the different ways of getting cold, hard cash. From using a top overseas travel card, ordering cash in advance or exchanging pounds at the airport, our analysis shows getting foreign cash the wrong way could slash over 20% off your holiday budget - so we show you how to get the most bang for your buck.

For more tips to avoid being ripped off when exchanging cash, see our guide on the cheapest ways to get travel money.

What does our analysis show?

While spending on a top overseas travel card is the easiest and, in most cases, the cheapest way of spending abroad, we know many of you like to have some cash in your wallet, so we've compared the cost of getting €100 and €1,000 in cash in different ways. For the cards below, we've assumed one cash withdrawal while abroad for €100 and five withdrawals for €1,000 - using an ATM that doesn't charge a fee. 

Of course, there are no guarantees you’ll get the same rates as they change every day, but the general principle of which method is cheaper is unlikely to change.

Ways of getting travel cash

Cost of €100 (incl all fees) Cost of €1,000 (incl all fees)
Top overseas PREPAID card (1) £89.29 £906.80
Top overseas DEBIT card £89.42 £894.20
Top overseas CREDIT card (2) £89.42 £894.20
Top rate for cash using TravelMoneyMax (collection) (3) £90.04 £896.32
Top rate for cash using TravelMoneyMax (delivered) £94.63 £896.72
Bog-standard debit card £91.12 £911.18
Debit card 'from hell' £93.78 £931.28
Airport walk-in rate (4) £109.71 £1,047.23
Rates compiled Thurs 19 July 2018. (1) Mon-Fri only. (2) Assuming you pay it off immediately in full. (3) Central London post code. (4) Birmingham airport.

Note: The Halifax Clarity credit card and Starling Bank debit card were our top pick overseas cards, while Revolut was our prepaid pick. First Direct was the 'bog-standard' debit card (typical 2% fee), Santander 123 was card from hell (2.75% transaction fee plus cash fee of 1.5% unless using a Santander ATM in Spain), while we used our TravelMoneyMax tool for the best rates on cash before travel.

The cheapest ways to get travel cash

Using a top overseas card such as Starling or Halifax Clarity, which don't charge any transaction fees, to get cash out of an overseas fee-free ATM - as opposed to a bog-standard credit/debit card charging a typical 2/3% fee - is the cheapest way of getting currency.

While prepaid card Revolut is the cheapest option for withdrawing €100 (as it uses the perfect interbank rate, rather than the near-perfect Mastercard or Visa rate other cards use), the cards above are our tops picks as Revolut caps free withdrawals at £200 per month and adds a 0.5%-1% fee at weekends.

Alternatively, our TravelMoneyMax comparison tool is a decent option if you're someone who likes to have euros in their wallet before jetting off as it compares rates from 30+ bureaux, for delivery or collection.

As we've always said, the most expensive way of getting travel money is by exchanging cash at the airport without pre-ordering as it's a captive market - in our example you'd be over £20 down when exchanging just €100 and an eye-watering £140 worse off when exchanging €1,000 - so avoid the airport rip-offs.

While we focused on getting euros, if you’re heading anywhere else and want cash, the general rule will still apply.

Important: Always withdraw cash in the local currency

No matter how good your card is, choose the wrong option at the ATM and it can prove costly - so always opt for the local currency when withdrawing currency or making a transaction on your card abroad. Using the retailer's own exchange rate or letting the local bank do the conversion for you is likely to give you a lot worse rate than offered by your bank, even if you don't have a top overseas card.

While it may sound simple, we've seen examples of overseas ATM providers using wording which is often confusing - seemingly hoping you'll accept the poor exchange rate, so make sure you carefully read the options on screen.

In the picture below (taken in Spain on 9 July 2018), if you'd chosen to accept the ATM's own exchange rate for withdrawing €70, you'd be £6.53 worse off than if you opted to let a top overseas debit/credit card do the transaction for you - even after taking into account the ATM's transaction fee.

For why you should always pay in euros, not pounds, see Martin's Using plastic overseas? blog.


Watch out for ATMs that charge fees

Aside from withdrawing in the local currency, it's also worth looking for overseas cash machines that don't charge a fee as many charge a typical €2.95 on every withdrawal - some even more. While these aren't always easy to avoid, fee-free ATMs are more likely to be found when connected to physical bank branches, rather than located next to key tourist attractions or in smaller resorts. Sadly in some countries, fee-free ATMs are a rarity - even within bank branches, so factor this into your budget.

If you can only find fixed-fee ATMs, it will be cheaper to take out larger amounts in one go as opposed to making multiple, smaller withdrawals - though you'll need to weigh up the saving against the security implications of holding lots of cash (many travel insurance policies won't cover you for cash over a certain amount).

For more tips to get the most bang for your bucks (or euros), see our guide on 19 cheapest ways to get travel money.