TRAVELLERS can save hundreds of dollars by shopping around, with new research revealing the most common holiday spending traps.

With the new Qantas Cash and Velocity Global Wallet cards recently shaking up the travel money market, financial comparison site Mozo.com.au has been investigating the best options for travel spending.

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Mozo money expert Kerry Lotzof says when it comes to the crunch, exchange rates are the No.1 factor deciding value for travel money.

"It takes a long time to save and plan for a dream overseas holiday, Aussies spend hours researching the cheapest flights and accommodation while missing the fact that some of the biggest and easiest savings to be made are actually about how you handle your cash on the road," Kerry says.

"The savings you can make with a few financial smarts can easily add up to a night in a very swish hotel - forget packing sneaky lunches at the buffet table to save a dime, these are smart things you can do that won't compromise your experience and will definitely save you money."

To get the most out of your holiday money, here are Mozo's Top 10 Travel Money Tips:

1. Travel with the right plastic in your pocket

Make sure you're aware of your credit card rates and charges if you plan to use your regular plastic. You're almost certainly going to get poor value rates with the average credit card. Look for ones targeted to travel, or consider a pre-paid travel money card, where your rates are already locked in.

2. Shop around for the right pre-paid card

Mozo's latest research found a vast difference between the best and worst pre-paid travel cards in the market, with exchange rates and fees potentially costing travellers hundreds of dollars for the average overseas trip. The OzForex Travel Money Card is the clear market leader currently, but the new Qantas and Velocity cards are also good value and also include reward points.

3. Don't pay in Australian dollars

Overseas retailers may try to lure you in by offering payment in your local currency. But there's a hefty, hidden conversion fee - typically more than 3 per cent - which is higher than a good overseas debit card foreign currency rate, and will still incur all the usual overseas fees. It's a much better idea to use up the last of your foreign cash or a travel card deal.

4. Avoid buying travel insurance from an airline or travel agent

Never buy travel insurance through your agent or airline. Mozo's research found Australians can pay up to four times too much, with airlines like Qantas charging up to 53 per cent commission. Instead, do your research online and compare quotes. And don't double up: you may already have travel insurance on a premium credit card that's sitting in your wallet, so don't pay twice.

5. Rental car insurance excess reductions

Paying extra to reduce your rental car insurance is the car hire equivalent of "would you like fries with that?" An extra $20 or so a day to lower your car rental excess really adds up over the course of a several week vacation. If you have travel insurance you're probably already covered as many policies offer rental car excess coverage - so check your inclusions.

6. Grab the maximum reward points

If you're a frequent flyer, it's really a no-brainer (the cards are very competitive) so choose a travel card where you get points for your spend - but "swipe" as much as possible because ATM withdrawals won't count or earn you any points.

7. Never use foreign exchange booths at the airport

Airport cash booths and bureaux de change are the very worst place you could possibly go to get foreign currency. Even if they claim not to have any fees or commissions you can bet that an extortionate charge is built into the exchange rate they quote you. You're better off using your regular bank card at a local ATM.

8. Move your cash in bigger bundles

Minimise transaction costs by exchanging and withdrawing cash from ATMs in larger amounts, and avoid reload fees by budgeting as close to the dollar as you can.

9. Keep money and cards secure

If you're carrying your currency in cash, watch out for pickpockets and be wary of leaving it in hotel rooms. Cards can be a safer option here, as at least you can cancel them, so make sure you've got the number of their 24-hour hotline to allow you do to this immediately. And don't leave all your cash and cards together, have a second card stashed in another part of your luggage.

10. Don't waste leftover currency

A recent Mozo survey found that Australians are wasting millions of dollars every year by bringing back spare holiday money and leaving it lying around in drawers. If money is held on a travel money card you can save it for a future trip, or try some well-placed international online shopping to stop it being eaten up by inactivity fees. Otherwise, convert spare money back or consider donating foreign coins to charity.

More travel tips:

• How to avoid credit card surcharges when booking flights

• Tips for becoming a first-class flyer

• Expert secrets for budget holidays

• How to spot a fake hotel review

• Avoiding the worst rental car ripoffs

Originally published as Ten top tips to save on your holiday