Your next holiday is on the cards

This has been a summer of plastic for British holidaymakers. More than ever before, we've used our debit and credit cards to take out money from overseas cash machines.

But will this trend mean that we'll stop paying so much for the privilege of taking out our own money when we're abroad?

Because if we're using the cards abroad in the same way that we're using them at home, then why should the pricing be so different?

Figures from payment company, Switch, show that in the early summer we were making 19% more trips to overseas cash machines than the same period last year. And the company is projecting that the annual total will set record levels, with six times as many overseas card transactions expected as five years ago.

According to the Association for Payment and Clearing Services (Apacs), one in 14 of all our card transactions now takes place abroad.

It seems as though there has been a substantial shift in our holiday spending habits, with more people confident of drawing out cash abroad and correspondingly fewer bothering with other advance-planning types of holiday money, such as travellers' cheques.

Brian Cunnington, head of travel services at Barclays, says there has been a "huge growth" in customers using their debit cards overseas. "People expect to be able to use their cards in the same way as at home. They like the convenience of it," he says.

Driving this change in habit has been the budget airline generation, he says. When people are taking low-cost trips at short notice they expect to be able arrive without any foreign currency and depend on their cards.

This is especially true of younger travellers, he says, "who were virtually born with the plastic in their hand". Instant travellers want instant cash, but how much should we be paying for the service?

Apart from a few honourable exceptions, most banks and building societies stick on extra charges when cards are used abroad, which when combined with fees for cash withdrawals, can reach 4.75% per transaction.

This might have seemed acceptable when travel was relatively infrequent and credit and debit cards were only used for special occasions. But in recent years we've become a nation of travel addicts and the overseas rake-off seems much more conspicuous. Nationwide, which has been prominent in opposing extra charges, makes no bones about saying that "banks are making millions in profit each year through these hidden fees".

"People should be able to access their own money free of charge, whether it's in the UK or abroad. Most people don't realise how much they are being charged," says Nationwide spokesperson, Jackie Lawrence.

Barclays has also shifted in this direction, forming a non-charging arrangement with a number of overseas banks, such as Deutsche Bank and BNP Paribas, so that withdrawals by its customers from the cash machines of these partner banks are fee-free. In the first three months of this year, this arrangement was used to the tune of ?10.5m in withdrawals.

The irresistible logic of the growth in the use of cards overseas must be more pressure to have fees reduced, says Sandra Quinn of Apacs. The banking industry wants to make the use of cards abroad as seamless as possible, but the more we use our cards when we travel, the more obtrusive the extra charges become.

This process of removing tariffs for cross-border use of cards has already taken a major step forward in Europe and Sandra Quinn raises the tantalising prospect that European law could hold down charges for us too.

As part of the introduction of the single currency, banks were banned from levying extra charges on cross-frontier cash machine withdrawals of euros.

European banks had been charging about 4% for these overseas transactions and despite some predictable grumbling, these fees are no longer allowed.

The regulations, which apply to all member states and not only the eurozone countries, specify that "customers should pay no more to withdraw euros from cash machines in other European Union member states than they pay for the same services in the country where they live".

Of course, in Britain consumers can't benefit from this, because we can't withdraw euros directly from a cash machine in this country. But it sets an interesting precedent for scrapping fees and if anyone did start issuing fee-free euros in Britain, there would be an intriguing test case.

Whether it's at home or abroad, cash machine charges are one of the perennial consumer battle zones. We really resent paying to get our own money, but it seems card providers can't resist trying to claw back some charges.

In the most recent skirmish, a deal was struck last month over a new wave of cash machines which have cropped up in convenience stores and pubs. These can charge up to ?1.50 per transaction and under the agreement they will have to make this charge clear before a transaction begins.

The surge in the overseas use of cash machines is also a reminder of how far we are from a cashless society.

According to Apacs, there are more cash machines and more withdrawals in Britain than ever before with 2.2 billion transactions last year. But even if we're keener than ever to get cash, we're never going to be keen on paying for it.