The four crucial steps for a happier holiday
Rising pound cuts the cost – but you can also save on car hire, phone bills and travel cover
HOLIDAYMAKERS can make this year’s break stand out by sticking to The Mail on Sunday’s ‘four don’ts’ financial plan. Don’t settle for poor exchange rates on holiday money, don’t pay a small fortune to hire a car, don’t forget to buy travel insurance and don’t rack up a shock mobile phone bill for just a few minutes on Facebook.
BOOST YOUR SPENDING POWER
TOURISTS are in for a pleasant surprise when they go to change their money into the local currency this summer.
The pound has gained strength against other major currencies this year thanks to a recovering economy and expectations of a rise in the Bank of England base rate, which influences exchange rates.
In the past 12 months the value of the pound has risen nearly 10 per cent against the US dollar and nearly 5 per cent against the euro. The increase has been even more spectacular further afield – it’s 24 per cent higher in Turkey, up 18 per cent against the Thai baht and almost 15 per cent stronger in Australia. Football fans off to the World Cup will get 17 per cent more Brazilian real than this time last year.
But don’t score an own goal by failing to check out the best way to buy holiday money.
Buying at the airport, where commercial rates are notoriously poor, will wipe out gains in the underlying exchange rate.
A purchase of 1,000 euros at Heathrow is £100 down the drain compared with the best currency provider, according to research from comparison website MoneySuperMarket.
And popping into your local bank branch is not much better – exchange rates are typically 5 per cent worse than an online deal, according to prepaid card provider FairFX. Earlier this year, Char- lie MacEwan and his wife Lucy took their two children Flora, ten, and Will, eight, on a ski holiday to the Alpine resort of Meribel in France. His bank, Barclays, quoted 1.12 euros for each pound.
On a friend’s recommendation he tried FairFX, which offered 1.17 euros – giving Charlie an extra £50 for holiday spending.
The money was loaded on to a prepaid card, which usually costs £9.95 but is free through our sister website This is Money.
Charlie, 47, says: ‘As it’s a MasterCard I could use it everywhere. And if I need more euros, I can top it up online.
‘You don’t get any interest on the money left on it at the end of your holiday but I’ll be using it again when I go to Madrid soon and then for a tour of First World War battlefields in Belgium and northern France in September.’
Prepaid cards are also a useful way to fix the exchange rate now if you are worried it may fall before you go away.
If the card is lost or stolen, the money cannot be spent without access via the PIN and the card will be replaced.
You can load a card with euros, dollars or sterling. But watch out for fees. It is usually free to use a card for shopping or meals out but some will charge you to withdraw money from a cashpoint. Banks in foreign countries may apply their own charge as well.
There may also be set-up fees, monthly management costs and penalties for not using the card in more than a year.
Foreign currency in cash form is best bought online before you go. Currency comparison website MyTravelMoney finds the best rates for a wide range of currencies. Check if you have to order a minimum amount and for delivery charges.
MyTravelMoney founder Daniel Abrahams says: ‘Below a certain threshold currency suppliers will apply a delivery charge of up to £10. If you don’t want to pay that, you can club together with friends to get over the minimum thresh- old.’
He adds: ‘If you leave it to the last minute, don’t
panic. Order online for airport pick-up.’
DRIVE DOWN CAR COSTS
FAMILIES hiring a car this summer could pay up to twice the price compared with last year and nearly a fifth more for extras such as a satnav or a child’s car seat. Research by specialist website iCarhireinsurance shows that hire prices have on average gone up by more than a third compared with the summer of 2013.
And charges for extras added on arrival have also shifted up a gear. A child’s car seat, a satnav, an extra driver on the policy and ‘excess insurance’ could cost an average £295 on top of the car hire price. This is 18 per cent more than last year.
Excess cover is the biggest cost – protecting a driver in the event
of an accident from having to make an initial payment before insurance kicks in. In some cases, a driver without this insurance would need to pay an excess of £1,500 or more if there was an accident.
But having a policy will set you back an average £116 for a week in popular holiday destinations if bought at the rental desk. That is more than five times the price of buying an equivalent policy before you leave home.
Tim Pinder, who lives in Cheshire with wife, Ann, 47, and their son Oscar, 11, is determined to avoid a repeat of what he calls an ‘uncomfortable mugging experience’ at the car rental desk when he goes on holiday this year.
Tim, 50, chief executive of a housing association, says: ‘I always feel emotionally blackmailed into taking out expensive additional insurance cover.
‘That’s despite never being prewarned or getting a price for it beforehand. If I don’t buy it I run the risk of the slightest scratch costing a fortune.’ After returning from a trip to Italy, Tim found he had been charged an excess of £1,500 on his credit card for damage to a rental car.
The damage had been done before he hired the car and he had pointed it out to the hire company before he drove the vehicle away.
Although he had proof, he still had the hassle of sending the necessary forms to Italy before he got a refund. To ensure the same doesn’t happen this year, the Pinders have bought car excess insurance ahead of their holiday to Cyprus.
The policy is from iCarhireinsurance and costs £2.99 a day. If they waited to buy the added extra when they landed at the airport it could easily have been four times as much.
Cover also includes damage to the windscreen and tyres, which policies bought over the hire company’s counter are less likely to feature unless you pay more.
Tim says: ‘I don’t think enough people know you can buy this excess cover before you travel. No one I asked in my office knew anything about it but it’s a fraction of the price and means I can drive away with a smile on my face.’
Find excess insurance quotes, or more about the policies generally, through websites such as iCarhireinsurance, TravelSupermarket, Questor and Moneymaxim.
ENSURE YOU HAVE TRAVEL COVER
A FIFTH of holidaymakers aged over 50 travel without insurance while a quarter only buy cover the month before, according to research by Saga Travel Insurance.
Without cover there will be no refund or returned deposit if you are forced to cancel a holiday. There will also be no claim to fall back on if your luggage goes missing and no medical costs covered if you fall ill on your trip.
Here are some top tips for buying travel insurance:
LOOK for the cheapest deals using websites such as Gocompare, Comparethemarket or MoneySuperMarket. Or let an insurance broker do the legwork for you.
CHECK the policy is likely to cover what you need before simply opting for the cheapest price. For example, £500 of cancellation cover won’t be enough for a £3,000 trip if you are unable to travel.
READ through any exclusions and key terms in the policy. For example, Comparethemarket warns that some insurance companies will refuse a payout for tropical diseases if you have not had NHS recommended vaccinations or taken the appropriate medication.
REMEMBER to take out a free European Health Insurance Card – it is not the same as insurance but entitles you to medical treatment in a European country for the same cost as paid by local citizens.
TURN to the British Insurance Brokers’ Association if you need help – it can signpost you to the right broker. This is useful for people who are struggling to find affordable cover for health reasons or who can’t get insurance for their trip at all. Go to biba.org.uk or call the ‘find a broker’ helpline on 0870 950 1790.
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