I know that many prefer ATMs, my fear is always what might happen if there is a technical problem, or the machine swallows your card when you are desperately short of funds. And of course some banks have hidden charges too. There is also a problem in some holiday resorts (just as there is here in the UK) of some groups of criminals using the Lebanese Loop method and hidden camera, etc to steal your card and your pin number, and then clear your account as soon as you walk away from the machine. These are not problems which can easily be resolved when you are away from home.

As for the alternatives, taking all your holiday funds in cash should not be contemplated, as it is unlikely that your insurance would cover such an amount in the event of loss or theft.

I personally would never recommend Euro Travellers Cheques, as any benefits are usually stacked in favour of those businesses which sell and exchange them, rather than those holidaymakers using them.

Euro Travellers Cheques are generally sold commission free in the UK, but at a rate of exchange which is a few cents lower than what you would find in overseas holiday resorts. So during the purchase transaction alone, you may lose around 3%. Then when you cash them overseas, you may be charged another 2% or 3%, although we have heard of cases of up to 10% being charged. If you bring any unused Euro cheques back home with you, the vendor will most probably cash them for you commission free, but at a buy-back rate which could be as much as 15% lower than the selling rate, so it really is a massive loss.

Sterling Travellers Cheques are sold in the UK usually with a fee of around 1% or 2%, although some places such as Lloyds TSB are currently selling them commission free. In major overseas resorts, although it may vary from country to country, holidaymakers can usually cash them commission free, taking advantage of the better exchange rates which are available outside the UK. If you bring any unused Sterling cheques back home with you, the vendor will most probably cash them for you commission free, at face value, so without the prospect of any additional loss.

A few cents and a few per cent here and there may seem negligible, but if you base it on your overall holiday spends for a typical family's two week holiday, then the potential differences between the value of Euro and Sterling Travellers Cheques can be shocking.

The accompanying insurance cover means that cheques are swiftly replaced in the event of loss or theft.

It is certainly worth doing some sums in advance, and shopping around for the best deals. I would normally just take enough Euro currency for the first couple of days, and use Sterling Travellers Cheques thereafter to take advantage of the best local deals, without the risk of any loss on buy-back deals on any unused cheques which you might bring back home with you.

David