I heart NY

by Sarah Modlock

1 February 2005

You join me as I head home across the Atlantic from a Stateside sojourn. After a week in New York - the city that never sleeps - I am ready for a long nap. And so is my credit card. Having said that, if your bank balance is still in good shape after the festive season, there is no better way to melt away the little-town blues than with a hop across the pond. While exchange rates remain in our favour it would be rude not to. At the time of writing, Yahoo's currency rate calculator reveals that you can almost double your money when buying dollars. And let's face it, if Carrie Bradshaw can sustain a luscious Manolo-and-Cosmo lifestyle by writing one article a week then there can be no better financial role model. But before you head off to the airport with an empty suitcase, it is worth getting to grips with a few facts and figures.

In the shopping capital of the world, it is essential to take your flexible friend. And believe me, your plastic will need to be more supple than a Manhattan pilates instructor. Make sure your card payments are up to date and you have enough credit left before you travel. The last thing you want is to have to your card declined or to rack up late payment fees. As well as making your trip hassle-free and preparing you for emergencies, it will mean you can buy those absolutely-must-have designer bargains. Make a note of the international number for reporting lost and stolen cards so you can act immediately if your shopping is rudely interrupted by a dropped wallet or even a mugger.

As if you needed any encouragement, many of the major department stores provide special discounts or free gifts to 'visitors' from overseas. For example, those nice people at Macy's - the biggest department store in the world - will give you a card slicing 11% off all your shopping.

Big Apple, big credit limit

Remember that every time you use your credit card abroad to make a purchase or a cash withdrawal you will be charged commission. This can be as much as 2.75%. So if your Gucci number costs £100, you will have to pay an additional £2.75. This doesn't sound much but adds up during a retail therapy frenzy. Opt for a card that doesn't make this charge. Nationwide is one of the few issuers which doesn't apply it.

Recent changes in the law have reduced insurance cover while shopping abroad. Foreign credit card purchases no longer enjoy the same protection as UK transactions after the High Court decided that Section 75 of the Consumer Credit Act 1974 does not apply. Under the rule, shoppers have the right to claim against the card issuer if a purchase is unsatisfactory, faulty, or the seller refuses to compensate them. The law applies to purchases with a price of between £100 and £30,000. The new restrictions will not only affect holiday shopping trips, they will apply to any purchases from overseas suppliers, including via the internet.

With credit card transactions booming, Section 75 has become a useful safety net. But many card issuers refused to recognise that UK law applied to purchases made abroad and refused to compensate customers. This prompted the Office of Fair Trading (OFT) to ask for an official ruling. It argued that the law should apply to all transactions with overseas suppliers including through the internet, over the telephone or via mail order. This view was opposed in court by Lloyds TSB, Tesco Personal Finance and American Express - the meanies - and the OFT is now considering an appeal. UK protection remains unchanged. However, you're not covered by Section 75 if you use a debit or charge card.

New York State of mind

Talking of debit cards, they are a great way to empty your bank account whilst abroad as they can now be used in cash machines all over New York - and the rest of the USA. But don't try using your Maestro or Solo to pay for dinner or shopping as they wont work. Don't forget to check your bank's exchange rate before you travel - it may be better value to withdraw the cash and convert it to dollars beforehand. The Post Office provides currency commission-free.

Most credit cards include some travel insurance but make sure you read the small print before you rely on it. It may not cover you for everything and it is certainly not worth the risk when travelling to the US where medical and personal liability costs could be huge. The friends I was visiting - Mimi and Ben - are both ER doctors and could no doubt perform some freebie trauma surgery if I was mown down by a cab or a gigantic bar bill. But I opted for a nice comfy annual travel policy which took just ten minutes to find and buy online before I left the UK. I almost needed it straight away when 25 feet of snow fell on the city the day before I was due to fly there.

On your return home, you will realise that the UK is full of old fashioned customs. They start at the airport. Our antiquated Customs and Excise limits mean that you can bring back a teeny £145 worth of goods such as clothes or electrical goods from the US. I kid you not. Anything above this amount will attract VAT at 17.5%, wiping out any savings you made on bargain purchases. Our nice Chancellor Gordon Brown is doing what he can to change this as he goes up against the European Commission. The limit could be raised to a slightly more realistic £1,000. In the meantime, it's not just a bulging Samsonite that will catch the eye of the customs people in the 'Nothing to Declare' channel. If you decide to 'frost' yourself in the 47th Street diamond district, they will not hesitate to cast a black cloud over your bling, as Victoria Beckham and Wayne Rooney's girlfriend Coleen McLoughlin have both found, to their cost.

So now you know what to watch out for. If you and your plastic can make it there, you'll make it anywhere.