EXOTIC holidays don’t have to cost an arm and a leg now that a little surfing can turn up low-cost accommodation and airline tickets.

What is surprising, though, is the number of holidaymakers who, having saved so much on the booking roundabout, throw a lot of it away on the foreign exchange swing. Travellers going outside the eurozone often fail to realise just how much they can cut the cost of exchanging money if they are prepared to shop around and follow a few simple guidelines.

The first of these is the simplest: don’t always wait to change your euros to local currency until you arrive at your destination. “People are so relaxed on holiday that they just don’t care about exchange rates,” says Eddie Hobbs, financial spokesman for the Consumers’ Association of Ireland.

Those going to holiday resorts should be particularly careful, as the exchange rates and commission charges at these destinations tend to be high. It’s a similar story in hotels generally.

Leaving currency exchange until the last minute before departure is also a bad idea. Banks at airports charge a significantly higher commission than in the high street.

The same principle applies to ferry ports, although the Fexco outlet at Dun Laoghaire offers customers a better deal by not charging commission.

Long before hopping on the plane or ferry, shop around at banks and bureaux de change at home. An informal Sunday Times survey last month of the cost of buying $100 US, $100 Australian and 100 South African rand in cash found that Fexco consistently offered the best value across all three currencies, because it did not charge commission.

Fexco charged €58.62 for A$100 and €10.70 for 100 rand. Bank of Ireland charged €62.15 and €13.28 for those currencies, respectively. For US$100, Fexco’s price was €89.42, a saving of €1.36 on the poorest bank price.

Of the banks, Ulster Bank came out on top in the survey, largely because it charged 1% commission rather than a standard charge of €1.27, which made it much better value on small amounts of foreign currency.

For travellers buying larger amounts of currency, however, the commission charged by all banks rises, although it is normally capped at €6.35 per transaction.

The cost of buying currencies depends on both the rate offered and the commission charged. Before checking the rates at retail outlets, check the current “wholesale” rate of the currency with the Central Bank or by looking up www.xe.com, a real-time global currency converter. The wholesale rate is the one used when a financial institution buys money from other institutions, while the higher retail rate is that at which it sells it to customers The bank, building society or bureau de change that offers the rate closest to the wholesale rate is the one to plump for. Double-check with the teller that the exchange rates posted on the display board are the ones on offer, as these boards are not always updated every day.

Consumers could be forgiven for wondering why the currency exchange rates shown in the financial pages of newspapers and on the evening news are not the same as those offered in banks or bureaux de changes.

Trevor McEvoy of AIB explains: “International money market rates are determined by the market on a straightforward supply and demand basis. While retail banks don’t determine these rates, our prices are set to follow movements in these rates. These prices include an additional ‘spread’ or margin to cover the exchange rate risk and supplement the cost of providing the service.”