How to avoid a summer holiday financial burn
Holiday season is upon us and with the pound falling against other currencies Chris Kay looks at how to avoid a financial hangover this summer.
As many of us prepare to jet off to warmer climbs, recent events have left some feeling uncertain about their summer trip overseas.
The holiday market can be a volatile one, so if you are going abroad, always look for a firm that’s ATOL accredited. If an ATOL travel company ceases trading, the scheme protects customers and ensures they do not get stranded abroad or lose money.
One common piece of advice is to pay with a credit card. This also gives you valuable legal protection under section 75 of the Consumer Credit Act if the company you’re buying from goes bust or doesn’t deliver the package holiday you booked and paid for. However, bear in mind that sometimes travel companies will charge a surcharge for paying with a credit rather than debit card.
If you are scouring the Internet for a last minute deal, be careful to read the small print and check all costs before going ahead. Baggage, transfers and seat reservations are common ‘extra’ charges that can soon mount up, especially if you are traveling as a group or family.
Wherever you decide to travel to, be mindful of one of the most enduring scams in the travel world – the foreign exchange. Since the referendum and Brexit vote, major providers have slashed their exchange rates to as little as €1 to £1 in airports, even though the true rate is around €1.20 to £1 (at time of going to press).
Online currency brokers are also squeezing customers, so shop around for the best deal. There are some great comparison websites that can give you an overview of the kinds of rates available before you venture to your High Street. Whatever you do, don’t leave exchanging money until you get to the airport if you want to get a good deal.
Travel insurance is another cost and one in four people choose not to take it according to one recent survey. As we are currently part of the EU, when traveling to Europe it is worth applying for the European Health Insurance Card (EHIC), which is completely free.
While not a substitute for travel insurance, EHIC will give you the same level of state-provided medical care as someone who lives in the country you’re visiting and is valid in all European Economic Area countries and Switzerland.
Bear in mind that the local level of care may not be the same as what you’d get in the UK and you may need to pay for part of your bills, if that’s how the local system works.
EHIC would not cover the cost of repatriation, if needed, and that could be very costly, so travel insurance is still a must.
Once on holiday, try to stick to a budget. According to TravelSupermarket, around 39 per cent of holidaymakers come back with a debt, which takes an average of almost five months to pay off.
The study also found that one in four of us get into debt to pay for a holiday we could not otherwise afford. If this you are one of those people, then make a commitment today to be more savvy in future and start saving for your next big holiday as soon as you get back.
Chris Kay is CEO of Cambrian Credit Union, formerly North Wales Credit Union, which is a community based, financial services co-operative. He has worked in the consumer-lending sector for more than 35 years. Cambrian Credit Union Limited is a member of the Government-backed Financial Services Compensation Scheme, protecting individual deposits up to £75,000.
Posted 26 July 2016