Cutting the cost of your holiday

Two weeks in the sun each summer can work out expensive - especially if you're travelling as a family. Follow our 10-step plan below to make your annual break cheaper without compromising on fun.

Buy travel insurance

Although it may seem like an extra cost, buying travel insurance can save you money in the long run. A comprehensive policy will cover you for cancellation, delays, medical treatment and lost or stolen possessions. If you travel without travel insurance you run the risk of running up massive medical bills if you have an accident. Government figures (Source: https://www.gov.uk/foreign-travel-insurance) show it can cost up to £16,000 if you need to fly home from the Canary Islands via air ambulance. The Foreign & Commonwealth Office suggests holidaymakers consider annual multi-trip insurance if they make several trips a year - this generally works out cheaper than buying several single trip policies. (Source: https://www.gov.uk/foreign-travel-insurance). Make sure you read the policy details thoroughly before you buy insurance to check it's the right cover for you.

Get a free EHIC

In addition to travel insurance, holiday-makers staying within the EEA (European Economic Area) should also make sure they have a valid European Health Insurance Card (EHIC). You can get this card for free at www.ehic.org.uk. "This gives access to state healthcare at a reduced cost or in some instances for free," explains Bob Atkinson, travel expert at MoneySuperMarket.com. "Each person travelling will need to have their own card in order to be covered, however this is designed to be used alongside an insurance policy - definitely not as a replacement."

Don't shop at the airport

Security concerns mean you won't be allowed to take liquids and toiletries bigger than 100ml on to the plane in your hand luggage. However, buying miniature toiletries can often work out expensive. A good money saving tip is to decant shampoo, shower gel and other items from full size packs into smaller containers, rather than buying travel-size items. Budget airlines often charge extra for in-flight food so you can save money by taking a packed lunch with you.

Find a cheap destination

When planning a holiday check out where the British pound goes furthest. The Post Office travel cost barometer (http://www.postoffice.co.uk/travel-cost-barometer) compares costs in destinations around the world. Its latest analysis found that eight key tourist items, including restaurant meals, drinks and sun cream, would set you back £31.84 in the Algarve, Portugal, compared with £76.59 in Sorrento, Italy.

Shop around for currency

Research by Which? found that tourists can save money by shopping around for the best foreign exchange provider. (Source: http://www.which.co.uk/news/2014/04/3-steps-to-saving-on-currency-exchange-363276/). Which? tracked exchange rates at 30 online currency providers, five UK airports and 10 high street outlets between 29 January and 26 February 2014. Based on the average rates over those weeks, it found that the cheapest option for buying 1,000 Euros was an online provider which worked out over £100 cheaper than the most expensive airport provider.

Avoid data roaming

If you take your mobile phone on holiday remember that you will pay extra for the data you use while abroad - it won't be included in your tariff. The cost of using a foreign mobile network can be very high so it's best to turn off "data roaming" on your phone before you leave the UK. Instead use free Wi-Fi when you arrive in your destination or visit an internet café if you need to check emails or social networking sites. Also make sure you know the cost of calling and texting from your mobile while abroad - this won't be included in your tariff.

Dynamic currency conversion

Watch out for "dynamic currency conversion" if you use your debit or credit card overseas. When you use your card in a shop or restaurant the retailer should give you the option of paying either in the local currency or sterling. If you choose sterling the purchase will incur a conversion rate set by the retailer which is unlikely to be as competitive as that set by your bank. For this reason always opt to pay in the local currency. Your bank will convert the payment to British pounds at a more favourable rate.

Credit card surcharges

When you book a flight, tour or package holiday watch out for credit card surcharges. These are levied by the retailer cover the cost of processing credit card payments and can be as much as 2%, adding £20 to the cost of a £1,000 holiday. You can use a debit card instead if you want to avoid credit card surcharges. Debit cards are rarely subject to such charges and if they are, they're usually less. Some travellers like the protection offered by paying by credit card - purchases of £100 or more are covered under section 75 of the Consumer Credit Act. If that applies to you, pay the deposit by credit card and the balance by debit card.

Car hire

If you need to hire a car overseas then shop around for the best deal before you go. When doing so it's important to watch out for hidden extras such as charges for extra drivers or drivers under the age of 21 or 25. Most car hire firms will try and sell you extra insurance normally called a "collision damage waiver" or similar. This can be expensive and it's possible to take out excess insurance from an independent company before you go at a much cheaper cost.

Getting to the airport

Sit down and work out the cheapest way to get to their airport. Families might find it cheaper and more convenient to drive but airport parking can be expensive. You can save money by shopping around and booking parking ahead rather than paying drive-up rates. In general, off-site car parks will be cheaper than those situated within the airport. Couples and singles may find it cheaper to take the train or bus to the airport - you can compare the costs online.