Ellen Kelleher, Financial Times

If you escape often to your second home in the Loire Valley or enjoy spending August sipping sherry at tapas bars off the Plaza Mayor, you might want to consider setting aside some euros ahead of time to finance your excursions.

The tough part is working out the best way to maximise the spending power of your hard-earned sterling. One option is to open a current account with one of the local banks such as BBVA or Banco Santander in Spain or BNP Paribas and Credit Agricole in France.

A second and arguably more manageable option would be to open a UK-based account denominated in euros. HSBC, Barclays, Lloyds and Citibank all offer this service. Which option you choose would depend on the length and purpose of your stay.

Euro and dollar-dominated accounts are in vogue these days as more Britons flock to neighbouring countries on holiday. “We’re finding that in today’s world both in business and in leisure, people are more mobile than ever before,” says Simon Wyatt, head of marketing at Lloyds.

HSBC offers accounts in dollars and euros and 87 other currencies, including the Singapore dollar, the United Arab Emirate dirham and the Danish krone.

The monthly cost of maintaining an account with HSBC in either euros or US dollars is £3 while the cost of keeping an account in other currencies is £5 per month. The cost of issuing a cheque in euros is £0.60, while the cost of writing one in dollars is £1. You can transfer money into a deposit account in the same currency and a line of credit is also offered in all currencies.

Citibank offers the same services as HSBC and rates are similar. You can secure loans in local currencies and transfer euros around the world from one account to another. The cost of drawing cheques in another currency abroad is £15. Citibank does not charge a fee for depositing cheques in US dollars or euros into an account but interest rates on most of Citibank’s euro accounts are just 0.05 per cent.

In contrast, if you have a savings account with Credit Agricole in France, for example, you could earn from 2 to 2.5 per cent in interest. If you need a current account to facilitate direct debits and other transactions, you are unlikely to receive any interest.

Another option if you are interested in saving money in Euros is to open a savings account with Nationwide International, Alliance & Lecester International or Bradford & Bingley. The interest on these accounts rival those offered by French or Spanish banks.

The European Central Bank recently raised interest rates for the Euro and some banks have started to follow suit. Nationwide’s rates for Euro savings accounts range from 2.5 to 2.6 per cent.

Separately, Citibank, Lloyds and HSBC also offer mortgages for properties purchased abroad. But the rates can be as much as one to two percentage points higher than if you were to take out a mortgage or loan in the country where you are residing.

Often, people open an account in another currency with a UK bank because they are receiving payments from another country.

But another benefit is familiarity. Many customers who have an established account with a UK bank feel more comfortable taking out an account in euros with their family bank than with one outside the country.

“If a customer has had a standard account with Lloyds for a long time, sometimes that makes them feel more comfortable,” Wyatt says.

However if you own a property abroad and have to pay utility and electric bills or make mortgage payments, in most cases it is advisable to take out an account with a local bank. Paying bills with a standard euro debit card is possible but the fees are usually quite high for international transfers. In addition, overseas banks have been expanding their services for Brits.

In France, banks such as Axa Banque and Union de Credit pour le Batiment, a division of BNP Paribas, have groups that take care of mortgages for British nationals. Credit Agricole has “Britline” branches in Normandy catering to English-speaking expatriates. Its Britline staff all speak English and, upon opening accounts, clients can conduct much of their business such as handling loans and insuring their properties by post, telephone, the internet and fax.

In France and Spain, mortgages can be arranged at far more favourable rates than at a UK bank and monthly payments can be debited automatically from your current account. But the disadvantage is that often money saved on rates is lost in fees when you transfer funds from a sterling account in the UK into one at a local bank. Also, French banks typically require a 15 per cent deposit to secure a mortgage and Spanish banks require around 20 per cent.

“In the UK, you can get away with a 5 per cent deposit on a property, so having to put more money down with a French or Spanish bank can be a deterrent. Also, the fees for estate agents and lawyers for handling the deal are very high,” says Peter Seymour, managing director at The Mortgage Shop Plus, an offshore mortgage broker.