In general (not specifically in Scotland), we use credit cards for flights, hotels, car rentals, and sometimes an expensive dinner or major purchase. We use cash for everything else, and also for smaller B&Bs that prefer it. Some hosts and merchants put a surcharge on prices when paid by card, to cover the fees they must pay the card issuer. We get the cash from local ATMs, taking out as much as possible at a time since there's usually a fixed fee for a withdrawal.
The "exchange rate" is a daily fluctuating ratio between currencies which none of us can control or predict, but it seldom varies more than a small amount from day to day, or month to month. You'll get the best exchange rate, the one banks use between each other, by drawing cash from an ATM. But what really matters to the bottom line are the fees banks and card issuers charge, which are separate from the exchange rate.
Frequent travelers sometimes recommend credit cards and banks that don't charge foreign transaction fees. I think one of these is Capital One, others are certain credit unions. We just use the cards and banks we use at home since we don't travel enough, or expensively enough, for those fees to make much difference. Other posters will probably share what they know about this.
EDIT -- Also, what David said above.