British holidaymakers are set to pay more than £300 million in extra charges this summer for accessing their money and buying essential items while abroad.
According to our research, 12 million people from the UK will use their credit cards while on holiday this year, accumulating some £327 million in fees in the process.
It is one of a number of ways in which holidaying Brits will lose out financially this summer, despite many of the fees and charges being totally avoidable.
The most significant impact on travellers’ wallets will be made by people being charged for taking cash out of an ATM machine while abroad – cash that could have been taken with them on holiday, if people had budgeted correctly before jetting off to sunnier climes.
For many people, some of the charges will come as a surprise, as processes that do not usually carry a fee in the UK – such as using a debit card – carry a typical provider exchange rate transaction fee of 2.75% when abroad, as well as a cash fee of up to £5.00, depending on the bank, providing a double whammy of charges.
A key solution to the problem of being charged over the odds is to plan adequately in advance, which includes booking the holiday itself and also arranging foreign currency.
Our research found that 44% of holiday bookings made by a credit card will not offer the consumer any special features, such as cashback, rewards or a 0% purchase rate, while a third of travellers are failing to seek out the best exchange rate for the currency they require – even though shopping around could result in major savings.
This failure to seek out the most cost-effective deal appears to follow people on the plane to their destination, as a quarter of people who need to use plastic while on holiday will simply use whichever card is handy, rather than working out which will be cheapest to hand over at the till or insert into the cash machine.
Proper planning and preparation
With the typical cash fee for using a credit card abroad being £3, it pays to be well prepared to avoid having to use any plastic while abroad.
Travelling abroad is expensive enough without the extra penalties for using the wrong card while you’re there. Financial awareness may go into holiday mode, but a high credit card bill is one holiday hangover you can do without.
If there is no choice but to pull out the plastic while on holiday, the golden rule is to use credit cards for spending and debit cards for withdrawing cash, though it is worthwhile checking the fees charged by each bank and exploring the possibility of a credit card with no transaction fees.
Other options available
Alternatively, get a pre-paid currency card which offers the convenience of a credit card without the borrowing and allows you to top up foreign currency, some with no commission charges. The best thing about currency cards is that you can only spend what you load on them so you are guaranteed not to overspend.
Being prepared can help to keep holidays within budget and eliminate the possibility of overspending – something that is pertinent to the 18 million UK holidaymakers who will put the cost of the holiday on their card this summer, and particularly the 12% of people who are still paying for last year’s holiday.
With £327 million in fees and charges set to be paid by British travellers this year, it clearly pays to be prepared.