The real cost of going on holiday
British holidaymakers will spend £282 on clothes, grooming and other holiday preparations on average this summer, according to research from credit card company Capital One.
This is almost as much as the average cost of their flights (£296), and not far off the average amount spent on accommodation (£350).
Clothing and swimwear accounts for the biggest pre-holiday expenditure, at £53 on average. Travel insurance (£29), accessories including sunglasses and hats (£21), duty free purchases (£21) and electronics (£17) are the next most expensive pre-holiday essentials.
Meanwhile, 12 million sun-seekers plan to use a credit card while abroad this summer, according to uSwitch, and they could rack up fees of £27 each in the process.
Typical average exchange rate transaction fees of 2.75% and ATM withdrawal charges of £3 per time are largely to blame.
However, those planning to use debit cards could also face even heftier fees. Not only will they have to pay a 2.75% transaction fee, but they will also be charged a 'purchase' fee of around £1.25 per transaction.
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Michael Ossei, personal finance expert at uSwitch.com, says: "Taking action now and snapping up the cheapest travel cards could save you hundreds from the cost of your trip. There are credit cards on the market that charge no transaction fees when you use them abroad – these are the ones to go for."
"Alternatively consider a prepaid currency cards which offer the same flexibility for purchases and withdrawals as a debit or credit card with fixed charges. These cards can offer very good exchange rates as well as the security that you can only spend what you load onto the card," adds Ossei.
Most popular pre-holiday purchases:
|ITEM(S) PURCHASED||COST PER PERSON (£)|
|Clothing and swimwear||£53|
|Sunglasses, hats & accessories||£21|
|Last minute duty free purchases||£21|
|Hair & beauty treatments||£15|
|Make-up, cosmetics & toiletries||£15|
|Luggage & travel accessories||£14|
|Gym membership, fitness classes & personal training||£12|
|Medicines and vaccinations||£11|
|Books, magazine & music||£11|
|Toys & games (none electronic)||£10|
|Diet products e.g. slimming aids, specialist foods||£8|
|Guide books/translation books||£7|
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.
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.