When paying for anything by credit card in Spain, I’m often asked if I want to pay in Euros or Sterling. Is one method consistently beneficial to UK travellers, or does it vary? Fred Sommers, Eversley, Hants

Sunday Times travel expert Richard Green responds: It might seem that there isn’t much in it – whether you choose to pay in Euros or Sterling – but in fact the latter is something of a ruse by the vendor.

The reason is that if a vendor puts a Sterling amount through on your credit card, known as a "Dynamic Currency Conversion", he or she can then sting you for an extra charge, called a "Conversion Fee". And often this is a whopping 4 per cent of the purchase price, which you probably won’t discover it until your bill comes through. This charge will be levied any time that you sign a slip or enter your PIN into a terminal, which shows the sale in pounds sterling, so it makes a lot of sense to always have the amount displayed in the local currency and avoid the charge.

Many overseas ATM’s also give the option of withdrawing local currency in a Sterling equivalent amount too, and you should avoid this for the same reason.

Sometimes, unscrupulous vendors make out the amount in Sterling without first asking, hoping that you won’t notice it, or be aware of its significance.

It’s estimated that using debit and credit cards abroad is hitting British travellers with a array of "hidden" charges that are bumping up the cost of our holidays by over £500 million a year. In everyday terms, it means that if you buy a carpet on holiday worth £250 with most credit or debit cards, you could find it appearing on your statement as £270.62 – an 8.65 per cent hike on the tag price.

At least the charge brought on by a "Dynamic Currency Conversion" is one that is easily avoided.

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