Avoiding holiday money ‘mares

Euros in a wallet
  • | by Rachel England

You’ve been looking forward to your two weeks in the sun all year long. You’ve got your currency changed and you have found a cheap travel insurance policy as a cursory afterthought, so you’re set, right? Maybe not. Before you jet off, take a look at our list of common holiday money pitfalls. 

Hidden card charges

Brits collectively spend millions every year on hidden fees incurred for using their credit cards abroad. The best way to avoid this is by using cash (many High Street agents offer 0 per cent commission and decent rates on currency exchanges), but this isn’t always ideal in some parts of the world - remember, never carry all your cash at once. Pre-paid cards, which are ‘loaded’ with money - and have no link to your bank account - are a handy alternative, and if they’re lost or stolen, most providers will replace the card with the funds in place. But make sure you use one that won’t charge you for making purchases or withdrawing cash – there are plenty out there.

However, if you want the security of using credit cards (to protect against purchases and activity cancellations, for example), find one that’s suitable for use abroad. Withdrawal fees (around £3 per transaction) and immediate interest accumulation are commonly slapped on credit cards when used overseas, so don’t assume that yours is exempt. There are many on the market that offer no foreign usage fees, providing you pay the balance off each month – many of which come with extras like travel insurance.

As a general rule, debit cards should be avoided abroad. There are some so-so offers as far as use abroad is concerned, but this usually means moving current accounts, which is a lot of faff for a week away.

Blocked cards

If you plan on using a credit card abroad, make sure you tell your bank that you’re planning on doing so. Otherwise, they might notice ‘unusual activity’ and helpfully block it, preventing you from accessing your money until you can get the matter sorted. Unfortunately, telling your bank doesn't always guarantee this won’t happen, so it's worth taking additional methods of payment with you.

Doing the maths

Make sure you have at least a rough idea of your currency exchange rate before you go, lest you end up getting ripped off at a bar or market because you think you’re getting a good deal, or, like PR exec Hannah Lord, from Hampshire, who told us that she ended up accidentally withdrawing £300 from a cash point in a dodgy part of downtown Nairobi.

Travel insurance fine print

According to Peter Burgess, marketing director of Gocompare.com’s travel partner TheIdol.com, one the biggest mistakes people make with their money abroad is not reading their insurance documents properly. “By and large, travel insurance will cover you for most eventualities,” he says. “But people do get caught out for more obscure events if they don’t read the small print. People often aren't completely aware of what’s covered and what’s not.”

He also says that it’s vital those with existing medical conditions declare them when taking out a policy, noting that it’s this that causes the majority of claim issues. “Declaring the condition may result in an increased premium, but the pay-off is total peace of mind.”

He adds that insurance policies that come as part of a package with holiday deals or credit cards, for example, are not exempt from this, and that individuals must inform their provider of any existing conditions, otherwise claims may be rendered invalid.

Expensive phone tariffs

Even though networks have been forced to drop roaming charges, using your mobile abroad is still one of the easiest ways to drain your bank balance (more so now that everyone’s plugged into Twitter and Facebook 24/7). Check with your network operator to see what their overseas call/data rates are and enquire about bolt-ons or deals that will help to cut the cost of phoning home. Or better yet, switch it off. You’re on holiday – what do you want your phone for?

Local scams

One thing guaranteed to ruin your holiday is falling foul of conmen and criminals. From straightforward pickpocketing to elaborate scams, thieves rely on ignorance to pull off their pranks. The Telegraph has a good list of tricks to watch out for, but you can do yourself a favour by doing a bit of research on the area you're visiting, carrying your cash and documents in a money belt, trying to keep the boozing under control (so you’re not totally unaware of your surroundings) and, most importantly, not looking like a completely hapless Brit abroad.