As we come closer to those wonderful holidays there are a number of things you should consider before turning off the phone, dislocating your watch and surgically removing your computer. Going abroad can be expensive. Over the last year Sterling has weakened and the Euro has strengthened making the cost of goods abroad very uncomfortable indeed. Look at what you can possibly do to reduce that cost.
In a recessionary time one of the first things to go is the holiday. I suspect therefore that last minute deals will come up and will be attractive so watch for them.
Consider holidays to foreign climates where the currency has weakened further. The dollar is under pressure and the cost of goods there is outstanding. I spend a maximum of five hours shopping every three years and they are all in the U.S. the cost of eating out there makes the return almost unbearable.
If you are buying currency this is where you can really get ripped off. ‘No commission’ means absolutely nothing. It is a sure fire way to lose good money.
When you buy your currency, ask what you will receive for £100 after all charges are taken into account as the currency exchange rate and fixed charges can be excessive and in some cases close to 4%. A £3000 spend on your holiday would rack up an unnecessary £120 loss – no wonder credit card companies are doing so well.
Personally I would buy my currency well in advance if I was tripping abroad. Some companies can secure rates almost at Interbank rates for you which can have a colossal difference. Companies like Crown Currency Exchange are offering 1.2835 for Euros and 2.0536 for US dollars for August next year. Even short term money has quite a difference.1
The Post Office is offering 1.9337 today for dollars whereas Crown are offering 1.9578.2 That’s the easiest two dollars and 21 cents you’ll make. You see marketing isn’t everything. That’s a 1.1% difference on all your transactions abroad.
The biggest rip off by some margin however is the credit card companies and cash withdrawals via your normal debit card. Last year I had the greatest fun in the world trying to find out why my Alliance and Leicester credit card had a difference of near 4% on a transaction I did in Kerry and the exchange rate at the time. I spent two hours going from the UK to the U.S. and back in pursuit of my long lost cash to find out that the credit card company just offer a poor exchange rate and that is their margin. They at one point blamed the hotel in Kerry saying they had made the charge but the £40 that went missing lay squarely at the feet of my Alliance and Leicester Mastercard.
On every transaction they levy a healthy charge and it’s disguised in the currency exchange rate as most people will not go back and assess the Interbank rate at the time. As for extracting cash on your card, don’t even think about it. As well as a currency charge, there is also the added single charge of a fixed fee. So if you are taking money out and it’s absolutely necessary, fill your boots as a fixed fee of £2 is 10% of £20 and 1% of £200.
The solution, Nationwide credit card. They don’t charge on the currency exchange – how refreshing.
Keep every security telephone number for your partner’s cards in your wallet and vice versa and also ensure you both have separate cards so if one is stopped, the other isn’t automatically stopped.
As for travel insurance, the cheapest isn’t the best so do your homework. The excess on some make the cover almost useless. Many don’t even cover the most obvious things so be sure what you need is covered.
Enjoy yourself and return safely
If you have a financial query call Peter on 0800 0112825, e-mail info@wwfp.net
The value of shares and investments can go down as well as up
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