Credit cards have become a prominent part of modern day life with British consumers using them to pay from everything from the household bills to purchasing a new car. More people have also started to use them abroad on their holidays as a convenient way to pay for goods and services or as a means of withdrawing cash.

However using a credit card in this way does have some drawbacks, which some people have found out about the hard way. According to Nationwide Building Society, Brits abroad were charged over £650 million pounds in fees for foreign currency usage during 2007. Every time people were using their credit cards abroad they were being charged around 2.75% on top of their purchases. Even worse was the charge for withdrawing cash a broad which topped around three percent. In addition to this there may have been added a withdrawal charge making the total amount very expensive indeed.

However this year it seems that holiday makers have learnt their lesson and are more inclined to take out cash before travel to take with them rather than withdrawing cash abroad. Recent statistics estimate that this year the credit card will be shunned and more than one billion pounds extra will be taken abroad to avoid credit card fees. On average British holiday makers are taking around two hundred pounds more in cash with them on their travels than they did in 2007.

Another reason for taking cash rather than the cards is it can help people to stay within their budget. When you are on holiday the temptation to overspend can be high. It can be easy to think that you are getting a bargain on all your purchases because the transactions are being completed in a foreign currency. Research by Travelex.co.uk found that people had been prone to overspending on their credit cards in recent years and wanted to ensure they stayed within their budgets this year, so were taking more cash with them. Other people said that they wanted to reduce the amount they were spending on credit card fees and therefore decided to take cash to avoid them as much as possible. For Travelex this is good news as more people are changing currency before they fly which means more business for them.

However there are some alternatives to credit cards if people do not want to take more cash. Taking large amounts of cash can become more problematic if you become a victim of theft whilst on holiday. If cards get stolen then can be cancelled easy enough, but once cash has gone it is very difficult to get it back. In order to bridge the gap Abbey bank introduced a new Zero card which does not incur any foreign exchange fees or fees for withdrawing money as a cash advance. Debit cards can also be a viable alternative with some cards also not charging for cash withdrawals. A third alternative is to purchase a prepaid card but be warned there are often fees attached to this; however they may be lower that the fees your credit card provider is charging.