Money Mensch: How not to get burnt this summer

By Martin Lewis, August 6, 2009
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Don’t fall into the money traps that await you as you embark on your summer holiday. To prevent the possibility of red faces, as well as red backs, I want to give you enough tips to keep you covered.

- sort out your cash
Those going abroad need to prepare for a shock. While the cost of flights and hotels have not risen to a prohibitive level, the weak pound means the cost of buying things once you are there is going to hit like Frank Bruno. Ignore “commission-free”. It is nonsense! All it means is you do not pay a separate fee, yet often the cost is just loaded on to a poor exchange rate. Forget all such spin; the only way to compare is to ask: “If I give you £200, how many dollars will I get after ALL charges?” To work this out speedily, use the www.travelmoneymax.com comparison site.

- Do not change money at the airport
While many people tripping to Europe this year will find things 20 per cent more expensive than last summer, airport changers will see their costs upped by more than a quarter. They know you are a captive customer, and they charge you massively more for it.

- Pre-order for airport pick-up
If you really want the convenience of airport pick-up, order your currency in advance and you get a better rate. On the day I checked, €500 cost £470 from Travelex at Heathrow airport, but only £444 by ordering in advance.

- Be careful how you
pay for foreign cash
Get foreign cash from a UK bureau and you could be charged an additional fee. All credit cards and a few debit cards, including Lloyds, Abbey, A&L, Barclays, Co-Op, outrageously treat this as a “foreign cash withdrawal”, meaning you pay a fee of £3-plus on top. Avoid this by using another card or, with debit cards, withdrawing cash from an ATM instead and paying with that. Use the right plastic. Spend abroad on specialist credit card Santander Zero, or Post Office and Saga, to get even better rates. Most cards add a hidden 3 per cent “load”, so spend £100 worth of euros and it costs £103. Yet these cards all have a zero load, meaning they’re unbeatable. Do repay in full each month to reduce interest, though.

- Watch for overseas debit card cash withdrawals
It is not just credit cards that charge a £3-ish fee when you take cash out of an overseas ATM; all debit cards except Nationwide’s do too.

- Avoid the cards from hell
Like most plastic, the debit cards of Lloyds, Halifax, NatWest, RBS and Abbey have a 3 per cent-ish load and an overseas cash withdrawal fee. Yet these hellish products also charge a fee of £1-£1.50 EVERY time you spend, so buy something worth a fiver and it will cost £6.50, plus the load charge. Quite simply, don’t use them abroad.

- Don’t leave car hire until you get there
Booking in advance can really scythe down the costs. At Malaga airport’s car hire pick-up queue, I recently met someone paying £60 per day for a smaller car than mine. I paid £9 per day. The main difference? He had booked there and then, and I’d booked in advance via a specialist comparison site. See www.moneysavingexpert.com/carhire for full info.

-- Get/renew a free EHIC for European trips
The EHIC is a government scheme which entitles you to free or discounted medical cover in EU state hospitals, plus those in Iceland, Liechtenstein, Norway, and Switzerland, providing you’re holstering a valid card. Yet nearly three million people have out-of-date cards, so check before you travel. If you do not have it, you can get one online at www.ehic.org.uk, at the Post Office or calling 0845 606 2030. Do not think of it as a substitute for travel insurance though, just additional security.

- Consider annual travel insurance
It is probably worth getting an annual travel insurance policy that covers all your trips. These can be as cheap as £15 for an individual, which is a fraction of the cost many travel agents charge for just a week’s policy. For details of the cheapest policies including for over 65s, go to www.moneysavingexpert.com/travelinsurance

- Pre-plan parking
Public transport is usually cheapest, yet if you drive to the airport, the sooner you book parking, the cheaper it is. There are a raft of web comparison services, suhc as www.airport-parking.co.uk and www.holidayextras.co.uk, which will find the cheapest for you.

- Plan an itinerary ahead
Tour operators and hotels tend not to have their own excursions, they just book local ones then add on their mark-up. So book these yourself, preferably in advance.

- Budget before you go
Remember, you are saving by not spending on food and petrol at home, so that can go into the kitty. But do a budget before you go then stick to it. You don’t always have to spend a fortune to have a good time.

    Last updated: 11:17am, August 6 2009