Travel Finances |
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Cut the cost of your holiday By Hannah Ricci
How many times have you returned home from holiday, dreading the arrival of your credit-card bill or afraid to check your bank balance? Holiday fever causes us to overspend by an average of £300, according to research from Western Union - that's
Maximise your holiday money
We save long and hard for our holidays so don't let a bad currency deal undermine your efforts. It's a question of personal preference whether you use currency or travellers' cheques, rely on a credit or debit card, or use a mixture of both.
Currency and travellers cheques are the most expensive way to go, so it's important to shop around for the best rates. Bureaux that claim 'commission free' offers will be making a profit in other ways - usually a poor exchange rate.
Exchange rates fluctuate daily, so buy immediately if you see a good deal. Good places to start are Marks & Spencer and the Post Office.
Pros and cons of plastic
Plastic is the safest and cheapest way to use your money abroad - providing you have the right card. The wrong card can add nearly £100 to the cost of your holiday, and it is estimated that banks rake in around £500 million in extra charges from customers using expensive cards overseas. In addition to the standard fee of around 2% that most providers charge for overseas withdrawals, your existing credit or debit card probably has hidden charges called 'foreign usage loading,' which vary from 1%-2.75% each time you make a withdrawal from an ATM. Some of the big banks including Halifax, Intelligent Finance, RBS, NatWest and Lloyds TSB now charge a further fee of around 75p-£1.50 every time you make a purchase with your debit card.
There's also a hidden charge on some credit cards. Normally, if you repay a credit card in full at the end of the month, you don't pay any interest. Yet many providers still charge interest for withdrawing cash, even if it's paid off in full. This interest is called a 'cash advance fee' and is often charged at a higher rate than on spending. Providing your bank does not charge for withdrawals - the cheapest way to withdraw cash abroad is using a debit card - the best deal on the market at the moment is Nationwide Building Society's Flexaccount debit card, which doesn't charge for withdrawals or purchases.
If you plan to use a credit card, the best deal is again with Nationwide, its Classic credit card has a rate of 14.9% APR, 2% fee for withdrawals and no foreign usage loading or fee on purchases. Withdrawal fees are unavoidable but there are ways to cut costs. Where possible always spend on your card rather than withdrawing money to escape the charges, and rather than making lots of small transactions, limit the number of withdrawals you make or better still, take out one large sum of money to cover the whole cost of the holiday. Don't carry around any more than you need and leave the rest in a hotel safe.
Get covered
Comprehensive travel insurance is a vital part of your holiday planning.
Travel agents charge than if you buy direct. Instead shop around online using comparison sites like insurancewide.com, insuresupermarket.com and confused.com. But don't be blinded by price. Cheap premiums often carry larger excesses, some of which are disguised as compulsory, when in fact you can reduce your voluntary excess in return for a lower premium. Always read the policy terms to see what's excluded.
Also, it's essential you declare a pre-existing medical condition or whether you plan to take part in extreme sports like skydiving - as this may affect your ability to claim. Many travel insurance policies allow children under 18 to travel free as long as the adults are insured. If you're likely to travel overseas more than once a year, you'll get much better value for money if you buy an annual multi-trip plan, rather than a single-trip policy.
Getting to the airport
Needing to be at the airport at 5am. This can add a substantial amount to your holiday if you don't plan ahead.
If you live close to an airport, taking a minicab is probably the easiest method of travel, but be sure to ring round a few local companies to get the cheapest quote and order both ways in advance. Taxi ranks at airports charge extortionate rates.
Airport parking can work out cheaper if you live further away. The key is to pre-book a space with one of the numerous airport-parking companies. You can compare rates for long and short-term stays at airports across the country on websites such as Parking4less.co.uk.
Holiday essentials
Buy your sunscreen and sunglasses etc at the supermarket in advance. Similarly, for holiday reading, there are big savings to be made at online bookshops like Amazon (amazon.co.uk).
Some items such as electrical products are cheaper at airport branches than high-street ones due to the removal of tax. But to find the cheapest deals look on comparison sites like kelkoo.co.uk or pricerunner.co.uk.
Phoning home
Using your mobile phone abroad to call or receive calls from the UK is incredibly expensive. The best way to avoid being stung is to leave your phone at home and buy a phonecard on holiday. But if you must take your mobile, there are alternatives.
You can change your phone's SIM card so your calls are directed through a different provider. Local SIM cards for different countries can be bought from suppliers such as 0044 (0044.co.uk) and UK2Abroad (uk2abroad.com) - which allows you to keep your existing number. With UK2Abroad you buy a SIM card for the country you are travelling to, then top it up with pre-paid credit.
Car hire
You can end up paying more than double if you don't pre-book. There are huge savings to be made with the many budget companies around, and comparison websites such as travelsupermarket.co.uk.
A quick search found a two-week deal on a medium-sized family car, such as a Renault Mégane, picking up from Lisbon airport in Portugal for £236.76 with Holiday Autos. The same hire pre-booked with Hertz costs £472.93, and not pre-arranged would cost approximately £490.
Out and about
Day trips are a great way to explore a new country, and activities and theme parks are a good way to occupy young children. These don't come cheap, but there are discounts around if you know where to look. A good place to start is the website of the local tourist board.
There is also a whole host of websites where you can book activities in advance, sometimes for a reduction in price. It's worth looking on websites such as flightcentre.co.uk and unpackagedattractions.co.uk.
Be wary if you find a site offering tickets at a big discount because there are lots of fraudsters out there. And even when booking with a genuine site, double-check the total price including taxes and fees before you book, because some offer discounts only to add on a large handling fee. And always ask for a family or group discount.
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