The top 10 holiday rip-offs
There's no shortage of people who want to cash in on our more relaxed frame of mind and profit from our holiday spending. So wise up to the rip-offs with our top 10 tips to ensure you don't end up throwing your holiday money down the drain.
1. Plastic not so fantastic
The ability to use ATMs while away takes a lot of the stress out of arranging your holiday money. This convenience comes at a cost, as using plastic abroad can lead to more additional charges than if you used your cards in the UK. If you use your debit card in an ATM abroad, most providers will levy an ATM fee and a foreign loading fee.
Charges vary between providers, but tend to be between 2% and 3%. If you use your debit card in a shop it also charges 2.65% of the transaction value plus 75p. So, if you made two £100 cash withdrawals and store purchases totalling £1,000 while abroad, this would result in a total of £58.80 in fees.
2. Costly credit cards
When you're abroad it's always wise to carry a credit card in case you get caught in an emergency. If you're thinking of using your credit card to withdraw cash while abroad, the advice is simple - don't. As well as charging an ATM fee and foreign-currency loading fee, credit card providers charge a higher rate of interest for cash advances than purchases.
Also, with credit card cash withdrawals you pay interest on the amount from day one and not after the interest-free period (normally 56 or 59 days) and do not benefit from any 0% introductory offer.
Holiday-friendly cards such as those offered by Abbey/Santander and the Post Office don't charge an ATM fee or a currency conversion charge.
3. Dynamic currency conversion
Dynamic currency conversion is a 'service' often offered to tourists by retailers, restaurants, car hire companies and hotels in many popular tourist destinations. Rather than charging you in the local currency they offer to convert their bill into sterling. If you are asked, always say no, buy a cheap currency-conversion calculator instead.
4. Buying currency at the airport
With so many charges for taking cash out at ATMs, it can work out cheaper to bring your currency with you. Don't leave it to the last minute and buy it at the airport as rates offered by foreign exchange outlets at the airport tend not to be as competitive as those on the high street.
British travellers could save £1.3 billion each year by shopping around for the best deal on foreign currency - a typical saving of more than £35 per purchase.
Many banks and bureaux de change now offer commission-free currency exchange, but it's important not to take these deals at face value. This 'free offer' will often be subsidised by a poor exchange rate.
5. Buying your travel insurance from a travel agent
If you buy a holiday from a tour operator or travel agent, chances are they will try to sell you travel insurance as well. These policies tend to cost much more than other policies on the market and, to make matters worse, the cover may well be inferior.
Shopping around for travel insurance is easiest on the internet. If you go away more than once a year the chances are you will be better off with an annual multi-trip travel insurance policy, than with a single-trip policy for each holiday.
6. Airport parking
According to travelsupermarket.com, if you just turn up at Heathrow Airport unannounced it can cost up to £45 per day to park your car. Charges at other airports including Gatwick, Manchester, Luton and Stansted are also sky-high if you don't book in advance.
Booking your car-parking ahead and shopping around can significantly reduce what you pay.
Alternatively, think about using public transport.
7. ID theft and card fraud
Identity theft isn't just a problem in the UK - when you're on holiday and your guard is down, the risk is arguably greater.
Card fraud abroad increased by 16% between 2011 and 2012. Fraudsters, thwarted by the introduction of chip and PIN in UK shops and ATMs, targeted countries that have not yet upgraded to the more secure technology. So, while overseas, be careful not to let your card out of sight.
Also, be wary if restaurant staff take your card away from the table to swipe it - they could be cloning it.
When committing identity theft, fraudsters look for national insurance numbers, driving licenses, bank cards, birth certificates and passports. So keep your documents in the hotel safe or in a hidden moneybelt.
8. Holiday scams
Wherever in the world you travel there are likely to be a variety of confidence tricksters eager to relieve you of your cash.
The Spanish flower scam: A kind-looking lady or child offers you flowers. As you search for coins to give them, your pockets are mysteriously emptied.
The American three-card trick: A common scam to watch out for if you're on a trip to New York. You watch three cards get shuffled around face down and all you have to do is pick out the Queen of Spades. The odds look good at one-in-three so you think it's worth gambling a few dollars - a very easy way to lose your money.
The Thai gem scam: Be wary of friendly tuk-tuk or taxi drivers who take you to jewellery stores with tales of how much money can be made by selling on Thai gems when you return home. You won't make a penny.
The Egyptian both-ways scam: A taxi driver offers to pick you up from your destination a few hours later, but on the return to your hotel you find the price has shot up. The reason why? You've have been charged for the taxi driver to wait for you.
9. Car hire at the airport
Charges can be quoted in daily rates in local currency, and it's tricky to work out on the spot what's useful, what's a rip-off and what you need in collision damage and excess waivers.
Price-comparison websites and booking in advance is the easiest way to find the best deals. Prices vary considerably - if you want to hire a medium-sized car from Malaga airport in Spain for two weeks it can cost anything from £162 with Argus Car Hire to £391 with Avis.
10. The wrong currency card
However, while there are some great cards available, there are many others than have so many hidden fees and charges that they end up confusing - and costly you - dearly.
Although there are free currency cards out there, some providers will charge a one-off application charge and others levy a monthly fee. Some cards also charge a fee when you use them to make a purchase or withdraw money.
These are not the only fees to watch out for. As well as a fee for getting a replacement card, some providers will charge when you top-up the card or renew it.
Finally, Travelex (which also provides currency cards for Thomas Cook and the Co-Op) levies an inactivity fee of £2 if you don’t use a card loaded with currency for more than 12 consecutive months.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
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.
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.