Why your holiday will cost an extra £300

Sneaky hidden bank charges and the plunging pound will strip an extra £300 from the average family's holiday spending this summer.

Those travelling abroad will be hit hardest, but even families staying in the UK will suffer from spiralling interest charges and higher fees for cash withdrawals on credit cards.

Britain's weak economy sent the pound plummeting against other currencies late last year. It may have picked up slightly in recent weeks, but holidaymakers heading for Europe and the US will still feel the pinch.

Last year, £1 would have bought you €1.27. Today it gets €1.14, according to currency experts FairFX. A family spending €2,000 on credit cards last year would have been charged £1,574. This year they face a bill of £1,754.

Those travelling to the US have been similarly hit. A year ago, £1 bought $1.98; today it buys $1.58. For $2,000 of spending, the bill has risen from £1,010 to £1,265.

Travellers will also feel the impact of higher card charges for converting the money they spend in foreign currencies into sterling.

Abbey's standard credit card, American Express cards, Citibank, Clydesdale and Yorkshire banks, HSBC and Lloyds TSB have all increased this currency loading fee from 2.75% to 2.99%.

For their customers, $2,000 of spending will cost £300 more than it did last summer. Those going to Europe will find that €2,000 will cost £205 more, including the falling exchange rate. Nationwide, which had previously not levied these currency loading fees, is now passing on a charge from Visa that will add 0.84% on purchases outside Europe, rising to 1% from July 1.

Combined with the rise in the cost of the dollar, it means that $2,000 of spending will cost £302 more in sterling compared with last year.

One thing to avoid is taking out cash on your credit card because the fees are enormous. The cheapest charge 1.5% of the amount you withdraw, but the worst charge 3%. And there is a minimum fee - typically around £2.50. Since last year, Lloyds TSB has hiked the withdrawal rate on its six credit cards from 2.5% to 3%.

So £200 taken out incurs a fee of £6 instead of £5. Add on the 2.99% currency loading fee and you are being charged almost £12 for every £200 withdrawn.

M&S Money, Yorkshire Bank, MINT and Abbey's standard card have also all increased their cash withdrawal fees to 2.5%. The Post Office has increased its fee from 2% with a minimum of £2 to 2.5% and a minimum of £2.50.

Darren Cook, of financial data experts Moneyfacts, says: 'Each time you use your debit card instead of your credit card for a cash withdrawal you can save yourself enough money for another glass of wine.'

And on many credit cards the interest rate charged on cash withdrawals has been hiked. Abbey has moved from 22.9% to 27.9%, Citibank from 17.4% to 28%, and there are also big leaps from HSBC and John Lewis.

It's not just credit cards that have been hit. HSBC has hiked the withdrawal fee on its debit card from 1.5% to 2%. The minimum charge of £1.75 has stayed the same and there is a cap of £5.

When you spend on a credit card, you usually get up to 59 days to clear the bill before interest is charged. With cash withdrawals, though, interest is charged from the day you make the withdrawal whether or not you clear your bill in full.

Many families will also find that spending limits have been slashed on credit cards they do not use regularly. It could potentially also make life difficult with earmarked funds. This is money that is not deducted from your credit card, but is ring-fenced as an insurance payment for the retailer.

When you hire a car or check into a hotel, you typically have an amount earmarked on your credit card that is not cancelled until you settle the bill.

But if your credit limit has been slashed, it could mean that you don't have enough for other spending once other funds have been earmarked.