There has been a lot of talk about exchange rates recently, especially given how the pound has risen against the dollar and fallen against the strengthening euro since the start of the year. When these things happen, it’s tempting to wonder if we should try to time our holiday currency exchange to make the most of it. However, this isn’t as straightforward as you might think.

It’s incredibly difficult to second-guess where the currency market is heading, so you still risk buying at a bad time. If you buy months in advance, you also face leaving money lying around at home, where it’s a security risk and it’s attracting no interest. You could buy in two tranches, so you hedge your bets and definitely don’t exchange it all at the worst possible time, but you need to beware of exchange fees or delivery costs — which will soon eat into any gain.

Find the best deal

For most people, the most sensible approach is not to try to become a part-time currency trader, but to find the best possible deal at the right time for you. This is usually available from a credit or debit card without fees for overseas spending. You can’t choose when the exchange is made with these cards — it will happen at the point you spend, but the better exchange rate may make it worth it anyway.

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A quick spot check found that exchanging somewhere highly competitive on the high street would cost you £500 for €570, whereas spending on a fee-free card would cost £495. You don’t need to switch current accounts to get a new debit card, you can open a second account just for holiday spending, and transfer cash into it when you need it.

The best deals are usually from a credit or debit card without fees for overseas spending. · portishead1 via Getty Images

Shop around

The second most cost-effective approach is to shop around using an online currency comparison tool.

You don’t need to be within easy reach of a host of foreign exchange bureaux to shop around — you can get it delivered to a supermarket or shop nearby, or if you’re ordering a reasonable chunk of money you should be able to get free delivery to your home.

Don’t buy your currency on a credit card though, because this is treated as a cash withdrawal, so there could be a fee and interest to pay on top.

What to avoid

By far the most expensive approach to getting cash is to leave it to the last minute and buy at the airport. The same spot check found €570 would set you back £507 — £12 more than a card. If you have no choice other than to do this, use the online service to order in advance — even if you’re travelling that day. As long as you do it a few hours in advance, you should get a slightly better deal.