Cocktails: £15. Dinner in a candlelit restaurant: £60. A good bottle of Rioja: £25. Being ripped off by your credit-card company: priceless. Credit and debit cards might seem like the safest and most convenient way to spend overseas, but few travellers realise that the banks are grabbing a fistful of dollars every time we pay with plastic.

The procedure’s name sounds respectable enough – they call it foreign-exchange (forex) loading – but it amounts to an average 2.75% on top of every overseas transaction, meaning that a £100 dinner actually costs £102.75. Unless you own a Virgin credit card, which is upping its load to 2.99% on April 1, or the Goldfish MasterCard, which charges a whopping 3%.

Try settling that supper tab with a debit card instead and your bank will charge you a transaction fee on top of the forex load. The banks claim this covers the cost of processing your purchase, and it can be as high as £1.25 for Natwest customers and £1.50 for Halifax clients, for whom a fiver’s worth of ice cream costs £6.50.

But, since the bank is also taking a transaction fee from the restaurant – about 2.5% for credit cards and up to 50p for debit cards – you might think the best solution for you and your host is to nip along to the cash machine.

Think again. Public outrage stopped the banks charging for domestic cash-machine withdrawals eight years ago, but use your Natwest debit card at any overseas ATM and you will pay at least £2 for the privilege. Lloyds TSB will snatch up to £4.50, and Royal Bank of Scotland cardholders can be fleeced for a maximum of £5.

But the worst is yet to come: the Tony Soprano of all card scams is the “dynamic currency-conversion fee”. It works like this: your waiter (or a foreign bank’s ATM) asks if you’d like to be charged in sterling, rather than euros, yen, dollars or rupees. This seems convenient, as the real-time currency conversion – that’s the dynamic bit – allows you to see just how much that supper cost. Not only that, there’ll be no nasty surprises on your statement when you get home.

But the merchant is really on the make. Dynamic currency conversion allows him to overcharge you by converting your purchase at a more profitable exchange rate than that used by your credit-card company. Then he charges you for the service – which can add another 4% to your bill. So, that £100 dinner could end up costing more than £108.

So, how do you sidestep the rip-off merchants? By choosing the right card. Both the Nationwide Building Society’s Visa card and the Post Office MasterCard have no foreign-exchange loading fees, so if the bill is £100, that’s what you’ll pay – although they’ll charge you £3 and £2 respectively to take money from the wall.

The best product of all also comes from the Nationwide, which won the “most responsible credit card” title at January’s thrilling 2008 Card Awards ceremony. Take the Nationwide debit card away with you – you need to have opened a current account with the society to qualify – and you’ll pay no cash-withdrawal fees, no transaction charges and no loading costs. Spend £1,000 on holiday, making 10 purchases and five cash withdrawals with your debit card, and you’ll save as much as £50. Which is enough for two more bottles of Rioja.

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