Last minute holiday checklist
Many people will still be heading overseas this Christmas for some sand or snow despite the credit crunch.
If you’ve already booked your flights and accommodation, then it may seem like the only thing left to do is pack your suitcase and put your out of office on.
But getting your holiday finances sorted in advance is also vital.
1. Hedge your bets
The pound has fell to record lows against the euro at Christmas, and despite recovering slightly since then, it remains volatile. Keep an eye on currency fluctuations, even potentially buying some in advance and the rest nearer the time.
2. Don’t wait until the airport to change your currency
Waiting until the last minute to get your holiday money can be an expensive option, as bureaux de change at airports are notorious for offering poor exchange rates and high levels of commission.
Instead, compare the rates offered by your bank and other high street currency exchange services such as those offered by Marks & Spencer and the Post Office. You should also use the internet to see if you could get an even better deal by using a specialist online firm.
3. Watch out for charges
Remember, if you buy currency from the high street then withdraw your money in advance, as buying on credit card will see your provider hit you with the same foreign loading fees you'd be charged if you were actually using an ATM abroad.
Using a VISA debit card could also result in charges so withdrawing cash is usually best.
4. Tell your bank
If you also plan to use your debit card while abroad then make sure you let your bank know in advance where you are travelling to and to expect transactions. According to research from moneysupermarket.com, one in nine people have had transactions denied while overseas this year.
Although not all banks will be able to take this information into account and may still block your account because of fraud concerns, it’s still worth making that call.
5. Use the right plastic
If you have time before you travel then it might be worth considering a credit card with low or no foreign transaction fees. For example, Abbey’s Zero card has no foreign loading fee on purchases and allows you to withdraw cash fee-free too. The Post Office credit cards also come with no foreign loading fees, but be aware you'll face a 2.5% charge for cash withdrawals.
6. Protect yourself
Don’t be tempted to scrimp on travel insurance – with single-trip cover from just £5, it is well worth taking out cover. Travel insurance can cover anything from medical bills should you be taken ill or have an accident overseas, theft and damage cover for your possessions and even flight operators going bust.
However, cheapest isn’t necessarily best – read our guides to travel insurance and how to pick the good policies form the bad.
The difference between two currencies; specifically how much one currency is worth relative to each other. For example, if £1 is worth $1.50, converting sterling to US dollars, the exchange rate is 1.5. Converting dollars to sterling at those levels, the exchange rate is 0.66, so $1 is worth 66p. There are a wide variety of factors that influence the exchange rate, such as a country’s interest rates, inflation, and the state of politics and the economy in that country.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.