After enduring two years of restrictions, millions are looking forward to a well-deserved summer vacation. But with airports in chaos and inflation rampant, many vacationers are at risk seriously over budget when they can least afford it.
Here, Telegraph Money analyzes the most common money traps vacationers fall into and how to avoid them.
Use the right card
According to the travel card company Currensea, British holidaymakers spend £2.7 billion each year on exchange rates. Some of this is eaten by ATMs. Analyst Moneyfacts estimates that withdrawing £250 from an ATM abroad costs £11.88.
To avoid unnecessary costs, plan your spending amount in advance and find the best rates with an online comparison service. If you use your regular bank card abroad, you can end up with high – and unnecessary – bills, as many transaction costs of up to 3 pc.
To avoid these, take a free travel card, such as a Halifax Clarity credit card or Virgin Money M Plus. Pay in the local currency, as your card provider’s exchange rate will likely be better than the merchant’s.
If you don’t want to open a new current account, a prepaid travel card could be your next best choice. But the worst will charge you between £2 and £5 a month for holding the card. And beware of other costs, such as redemption costs. Currensea found that travelers return home with an average of £55 not spent on their prepaid cards, and may have to pay up to £10 to get their own money back.
Take out the right insurance
Having the wrong policy can cost you dearly – either because you paid too much for add-ons you don’t need, or because your cheap insurance offers very little protection.
Travelers on specialist trips should take extra care to ensure they are adequately covered, says Anna-Marie Duthie of financial researcher Defaqto. “If you’re going on a cruise or ski vacation, it’s important to choose a policy that provides coverage for this type of travel,” she said. According to Defaqto’s research, 88 percent of annual policies do not provide protection against risks specific to these trips by default.
Most policies offer protection if you miss your flight through no fault of your own and have to pay for another. But Ms. Duthie warned you could foot the bill if delays make you miss a connecting flight on another airline. “Under these circumstances, more than a quarter of annual travel insurance policies do not provide coverage,” she said.
Watch out for roaming charges
Since Brexit, almost all major mobile phone companies have have reintroduced data roaming charges in Europe† EE, Three, Sky Mobile and Vodafone are now charging their customers £2 per day; for a family of four on a two week break that would add up to over £100.
O2, Virgin, BT Mobile and Smarty still allow free roaming, but that doesn’t mean you should switch carriers just for the savings – they may be jumping on the bandwagon soon. If you’re traveling for longer than two weeks, a package deal like EE’s £10 30-day “Roam Abroad” pass can turn out to be cheaper. Most importantly, do not exceed your data limit. Even streaming YouTube for just one minute costs more than 3MB, according to Uswitch.
Reduce the cost of car rental
Global vehicle shortages have pushed up the cost of car rental this summer. While there’s not much you can do about this, you can save around $150 on your auto insurance.
If your rental car is damaged, you will have to pay a deductible to cover the costs – even if it is not your fault. This can go up to € 2,000. Many people fall into the trap of buying extra insurance when renting a car. But the average car hire company charges £189, more than five times the price of a policy from a specialist insurance company, such as iCarhireinsurance.com, which charges £35.48 for a week of cover.