Heading off on holiday? Then beware the swarm of sharp operators intent on parting you from your money. Emma Lunn guides you through the minefield.

 

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.

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; NatWest, for example, charges an ATM fee of 2.65% and a foreign loading fee of 2.25% up to a maximum of £4 per withdrawal. 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.

Nationwide is the only debit card not to charge these fees and is widely recognised as the best debit card to use abroad.

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.

Lloyds TSB Advance credit card, for instance, charges 11.9% on purchases but a massive 27.9% on cash advances. 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 Nationwide and the Post Office don't charge an ATM fee or a currency conversion charge.

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.

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.

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.

Using your mobile

While texts can be cheap, if you love to talk you could still be paying your bill long after the suntan has faded.

A recent vote by members of the European Union resulted in member states agreeing to reduce roaming charges, although this isn't likely to happen until later this year at the earliest.

It might be worth buying a local or worldwide SIM card to put in your handset. Go Sim and 0044 offer SIM cards that can be used around the world and mean it is free to receive calls abroad and cheaper to make them and send texts. Or, you can buy a local SIM card for the country you visit and pay local rates for local calls.

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.

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 2005 and 2006. 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.

Confidence tricks

Wherever in the world you travel there are likely to be a variety of confidence tricksters eager to relieve you of your cash. The Lonely Planet's Bluelist (2006/07) warns of a number of dodgy scams.

• 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.

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.

 

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