by : Stephanie Wendy

Everyone knows that banks will charge you for late payments to your credit card, fine you for going overdrawn and penalise you for cancelling cheques - so most people make sure this doesn't happen. But it's once you head off on holiday and let your guard down that the fees will start rolling in.

Everyone is on guard against fraud and identity theft abroad, but in fact you're more likely to be ripped off by your own bank than anyone else.

Shopping around for the best value exchange rates for your Euros and Dollars isn't enough; you need to be aware of the costs of using your cards abroad too.

Banks and credit card companies make millions of pounds every year from charges levied on foreign transactions and withdrawals but despite this, people still seem to think that money taken from a foreign cash point "doesn't really count".

What to look out for

Banks will make money from your holiday spending in three main ways, and unfortunately, in the run up to the summer holiday season many have chosen to increase these fees, potentially making millions more out of their unsuspecting customers.

Loading fee

The first type of charge you'll face is the exchange rate loading fee. Most people have no idea what this is as it's not flagged up on statements. The loading fee is typically around 2.75 per cent which is added to the exchange rate when you make a foreign transaction and which will just show up as a less favourable rate on your statement.

Because of this, the only way to know if you're being charged a loading fee is to check your terms and conditions, or ask your bank.

Cash withdrawal

Fees for making withdrawals are charged to both credit and debit cards when used abroad. This will usually be a percentage of the transaction - usually two per cent - or a minimum of around ?2 - for both type of card.

The main thing to bear in mind when choosing between your credit or debit card for foreign withdrawals is that interest will start to build up as soon as the transaction goes through using a credit card. This is because it is an instant cash transaction. You will probably also pay a higher rate of interest on any such credit card withdrawals, and they will be the last thing you pay off from your balance.

Spending fees

These only apply to debit cards but mean that even if you try to avoid the cash withdrawal charges by paying for everything on your card, you could end up paying up to ?1.75 per transaction anyway.

You should also check the currency that you're being charged in when making a payment on your card. Increasingly, retailers are charging in British Pounds rather than the local currency, meaning that you'll lose out on a favourable exchange rate, so double check before signing anything.

How to avoid these charges

There is a way of avoiding, or at least reducing these fees and charges; shopping around. Some cards do not charge loading or spending fees. Finding the right card for your holiday can make a real difference to the amount you'll have to pay out and leave you with a little extra to spend.

Carrying, and using your cards abroad is a convenient and safe way of ensuring that you always have access to money in an emergency, so don't give up on them - just make sure that you use the right one.