The summer season is upon us, and for many, that means that we embark on our annual holiday. From exotic long-haul destinations to city breaks – the cost of a vacation can soon add up as the local tipple starts to flow and as our worries disappear, so does our self-restraint when it comes to spending.
Each year on holiday, the average spend is £422, and with the cost of living rising, being savvy with our holiday allowance means that it will go much further. So, in this article we aim to shed light on the areas where you can be smart with your money, spending it on things that will make your holiday even more memorable, because that’s what really matters.
Insurance
As expected, the online searches for travel insurance dramatically increases over the summer months. Many of us are guilty of overlooking it, and in the majority of cases, there isn’t an event that causes us to claim on our insurance – but in reality, you never know when you are going to need it.
When you get down to the small print, most travel insurance policies are littered with exclusions which mean you can never be fully satisfied that your policy will pay out. When it comes to medical cover, it’s better to have insurance when you travel than risk it.
Purchase your travel insurance through cashback sites; this keeps the cost low, often below £5 per person. By opting for a basic policy that covers personal liability, medical and cancellation costs, but excludes events such as airport delays, you can often drive the price down even further.
Credit vs Debit
The world is going cashless, hooray! Plastic is plastic, right?
WRONG.
If you are going to embrace cashless, then make sure you pick a card that is designed to be used specifically for travelling. Otherwise both credit and debit card use is going to incur hefty fees.
Using your everyday credit in another country often means you will be charged with penalties for each transaction; including exchange fees, interest charges, cash withdrawal fees and non-sterling transaction fees of around 3%.
And those using their UK current account card don’t escape these charges; some of the high-street banks are known to charge £1.50 per transaction in addition to load rates and exchange rates. This means that for every £5 spent, you spend £6.65 – and your budget diminishes far quicker than expected.
The easiest option is to use specialist travelling credit cards, there are current accounts that also offer travelling benefits, but often it means that you miss out on everyday current account perks.
As with all credit products, you must ensure that you meet the minimum payment each month and avoid withdrawing cash on the card; a cash withdrawal can be seen to other lenders as an indicator that you don’t have funds in your current account and can negatively impact your credit score.
Currency
When using a credit or debit card, you will often be asked whether you want to pay in pound or currency, it might be the natural choice to choose pounds – but choosing the local currency is the best option.
When you choose sterling, the retailer is responsible for converting the currency and you may not be provided with the best exchange rate. By choosing the local currency, your card provider converts the currency, sourcing the rate closest to the wholesale rate.
Cash
We’ve covered plastic, so let’s discuss cash.
Despite moving to a cashless era, there are times when it is convenient to carry cash – when leaving a tip, splitting a bill or paying for transport.
The best strategy of maximising your cash is to order in advance; political landscapes worldwide are having an effect on exchange rates, and ordering your cash in advance protects you from fluctuations by locking into that day’s exchange rate.
Most exchange bureaux’s will allow you to order cash up to two weeks before you collect it, but charge a small fee for cancelling your order, usually around £10.
One thing you must avoid at all costs is exchanging your cash at the airport or ferry port, as they know this is your last chance to exchange currency and offer some of the worst rates around.
Tax
Many of us aren’t aware that we can claim back the VAT or its local equivalent upon our return; it’s reported that British holiday makers miss out on £300 million in travel tax rebates each year.
Check online before travelling if your chosen destination offers visitors a VAT or Goods and Services Tax rebate. The rebates are usually administered at dedicated reclaim desks at the local airport as they cannot be processed once you have returned home; allow yourself some extra time at the airport on your way home to make sure you can claim, and make sure you keep all of your receipts!
And there you have it! We are all aware of the adage ‘travel broadens the mind’ and hopefully our tips will make your funds go further and make the adventure even more special.
Thankyou to Andrew Wayland for Everyday Loans for this article and top tips!
