According to comparison site uSwitch.com, holidaymakers need to plan ahead to avoid paying over the odds on their debit and credit cards.

With the average exchange rate transaction fees of 2.75%, 12 million Brits risk running up over £327m in extra charges because they plan to use their credit cards while on holiday.

The reports found that the 12 million planning to use their debit cards abroad risk being doubly charged.

Not only will they have to pay a 2.75% transaction fee, but they will also be charged a ‘purchase’ fee of around £1.25 per transaction.

The report highlighted that using a debit card when withdrawing cash actually works out cheaper than a credit card, with fees of 2% rather than 3% on top of the transaction fee, and no hefty cash advance interest charges.

However, 60% have used a cash machine to withdraw money abroad, risking fees of at least £3 each time they do so using a credit card.

Michael Ossei, personal finance expert at uSwitch.com, said: “Family holidays inevitably end up costing more than you think, especially during the peak months of July and August. And with trips abroad now costing more than they did a year ago, as a result of the weakening pound, it’s even more important that holidaymakers don’t get ripped off by using the wrong card this holiday season.

“Taking action now and snapping up the cheapest travel cards could save you hundreds from the cost of your trip. There are credit cards on the market that charge no transaction fees when you use them abroad – these are the ones to go for.

“However, the card application process can be lengthy and waiting for your card to arrive can take weeks. If you think you’ve missed the boat, then at the very least you should compare the options in your wallet and follow this one simple rule, if you want to use a card on holiday, use a credit card for spending and a debit card for withdrawing cash.”

uSwitch.com also advised that holidaymakers consider prepaid currency cards, which offer the same flexibility for purchases and withdrawals as a debit or credit card with fixed charges, and often offer attractive exchange rates.

Ossei added: “If you prefer to pay with cash, make sure you take both exchange rates and commission rates into account to get the best rate on your money.

“This will normally involve pre-ordering your currency and collecting it before you travel. Avoid changing currency at the airport or straight from your debit card, as commission fees could cost you the much needed ice-cream for the kids and well-earned drinks for Mum and Dad.”