Whether it is a well deserved holiday or a business trip, the best prepared budgets can go drastically wrong if the currency costs do not add up.

Transaction fees should really be the subject of an in-depth investigation by trading standards officers. They would uncover a web of deceit that goes right to the heart of the financial world.

With foreign exchange accounting for more than 10 times the volume of the stock market – £3.2 trillion to £300m – it is not surprising that the actual charges are hidden.

As much as £21.25 could be added in handling fees and foreign exchange loading charges for someone spending just £500 in five transactions, according to Which? Magazine.

It makes sense to purchase some foreign currency in advance of a trip as there may be few – if any – places to buy perhaps late at night in a foreign airport, port or rail station. A bureau de change may sound like the best point but ask not only for their conversion rate but also for:

Any charge for converting British notes.

An extra fee for paying by plastic card.

The rate for resale (to see the 'turn').

Any fee for reselling and any time limit.

Fees are inconsistent even with the same provider. Departure points provide last-minute convenience and in consequence nearly always offer the worst deals. In fairness, firms may suffer high rents at such locations.

The difference between buying and selling can be wide. Two recent high street examples are 2.1804-1.8778 for the US dollar and 1.3946-1.1914 for the euro.

Shop around for competitive rates. Yorkshire Bank, for instance, offers 64 different currencies from Australia and Argentina to Papua New Guinea and Trinidad & Tobago with a free buy-back service.

Notes can be either delivered to a branch for collection or to a home address using recorded delivery.

The Post Office has over 7,600 branches which offer some foreign exchange of which 1,600 bureaux de change have over 70 currencies for immediate purchase.

Tesco offers free home delivery on all currency ordered online or by telephone. Currently it awards 25 Clubcard points for every £250 spent on foreign currency.

Cash machines in Britain which dispense foreign currency are already in place. Tesco (working with NatWest and The Royal Bank of Scotland) was the first in spring last year, followed by Halifax last September.

Now the Post Office is testing 13 commission-free euro and US dollar cash machines at selected branches (including Harrogate) with the same exchange rate as transactions over the counter.

M&S Money has 40 cash machines which will dispense up to £500 worth of euros and US currency per day subject to an individual's credit limit. To really benefit, use their own credit card and no interest will be charged until the usual monthly payment date, giving effectively up to 55 days of free credit.

Beware of online rates claiming to offer cut-price currency, such as Travelex. While theoretically this may be the case, the final cost could well work out higher than any in the high street with banks loading a charge for the transaction which is not revealed at the time of purchase.

Using an ATM to withdraw cash abroad is likely to give a wholesale currency conversion but a foreign usage fee will be imposed in almost all cases. According to Moneyfacts, Nationwide – Britain's largest building society – is the only debit card provider without such a charge on its FlexAccount.

Research from Abbey suggests the British have a worrying lack of awareness about whether charges have been made for transactions abroad.

No less than 45 per cent said they did not know whether their bank charged and 32 per cent who used their card for small transactions abroad did not check how much that would cost them. Last year there were 309m overseas transactions on UK-issued cards with £7.1bn withdrawn from cash machines, according to Apacs, the payments authority.

It makes sense to pay for as many goods and services using a credit card, not only to secure a far better exchange rate but to enjoy a credit period. Just four credit card providers have no foreign usage fee: Abbey on its Zero card, Nationwide and the Post Office – all worldwide – and Saga in the EU (with one per cent added outside the EU).

If cash is withdrawn on these credit cards, there is no extra charge with Abbey Zero but fees added of two per cent (minimum £2) with Saga and 2.5 per cent with the Post Office and Nationwide (both minimum £3).

Co-op Bank's Clear Visa has no fee for withdrawing cash but a 2.75 per cent foreign usage charge.

Pre-paid plastic is another way to pay abroad. That has the advantages both of budgeting and ensuring the exchange rate, rather than having to pay a quirky conversion level set by a local overseas bank.

FairFX offers a MasterCard on this basis with good rates. There is no charge if you apply through Matalan and the initial order is equivalent to at least £500 but otherwise a £9.95 fee is levied for three years. Caxtonfx Euro card has no commission and guarantees to be cheaper than any bank or bureaux de change.

The Post Office Travel Money Card can be loaded with cash before departure and reloaded during a trip by telephone from anywhere in the world.

It can be used in shops, in ATMs and does not require ID to secure funds. It is not linked to a bank account and can be quickly replaced if lost or stolen.

One of the clever scams is for a retailer to convert your invoice into sterling at its own appalling exchange rate to which it adds a commission of up to four per cent.

While hotels, restaurants and shops should ask if you would like this, many – like the Sheraton hotel group – automatically make such transactions.

To avoid the difficulty in obtaining cash abroad or the embarrassment of having a purchase refused by your plastic, ask the provider for the daily credit limit and, if inadequate, ask for it to be raised. That can even apply to a cheque guarantee card.

Travellers' cheques are still popular, giving the benefit of fixing the exchange rate upfront. They usually incur a one per cent commission.

They are safer than cash as you are protected from the moment of purchase once signed. If they are lost or stolen, they can be replaced with just one telephone call, usually within 24 hours.

One tip is to buy them in the foreign currency to be used. Yorkshire Bank offers nine different currencies. In the US, travellers' cheques are used like cash but elsewhere they can be exchanged at banks, hotels and foreign exchange bureaux. They have no expiry date and so can be saved for the next trip.