Guest post by Gavan Smythe
Picture this: You are doing it! This year you are finally taking that trip overseas! Whether that is taking a long-time dream vacation to the US (like my first trip to Disney World, which was simply uber cool), diving in the blue seas of the Mexican Coast or backpacking through South America.
There is a lot of excitement, emotions, preparation and questions that come up when travelling overseas: What are the must-sees? What cultural differences should I be aware of? Any medical precautions to take?…
And as you guessed there are also a few money issues that come with travelling far distances. Gavan Smythe from icompareFX is our guest today on the blog and gives a few useful financial tips to help you enjoy your overseas holidays to the fullest!
Financial Tips for Your First Overseas Holiday
There is no dearth of Europeans who travel overseas for holidays. While some have the money to go the lavish way, there are others who backpack their way around. No matter what the case, if you’re taking off on your first international vacation, paying attention to a few simple financial aspects ensures that your trip goes as smoothly as possible.
Determine All Expenses
Your major expenses on an international holiday include airfare and accommodation costs. The money you pay toward car rentals or local transportation can add up quickly, depending on where you’re going. You also need to account for how much you might spend on eating out, seeing local attractions, and shopping.
[Jonathan: If you are travelling to the US, do not forget the ESTA form and they have their own tipping culture for all sorts of services, thankfully here is a complete guide from Joyce at Financial Impulse to help us sort things out here]
Let Your Banks Know
It is not uncommon for European banks to temporarily block debit and credit cards when they suspect fraudulent transactions. This is possible if you end up using your card in a foreign country without informing your bank ahead of time. As a result, make sure you notify the banks of all the cards you wish to take with you of your travel plans. You may do this online, over the phone, or by visiting a branch.
[Jonathan: Yes Gavan, I remember that one, this actually happened to me in Singapore. I was at the restaurant and was ready to pay but the card did not work, because I forgot to activate the option to allow for transactions in Asia! Luckily I could activate the option in the online banking system of the bank]
Think Travel Insurance
Stats released by the Association of British Insurers (ABI) show that the number of travel insurance claims made in 2017 increased by 30,000 year-on-year, reaching to a staggering total of 510,000. At a cost of £385 million, this amounted to one claim every minute right through the year. Travel insurance can come in handy in different ways, so start by determining if it comes free with any of your existing credit cards. If not, think about getting it on your own. What you can receive cover against includes medical expenses, cancellations, and lost baggage.
Using Local Currency
When travelling outside of the European Union, it makes sense to carry some local currency with you. Think about buying some before you leave, or you might have to deal with unfavourable exchange rates offered at airports and hotels. Where you plan to go has a bearing on how much cash you might need. For instance, the use of cards is fairly common across North America, the UK, and Australia. However, travelling to some parts of Asia, Africa, and South America requires that you pay in cash for various transactions.
[Jonathan: My additional here tip here on paying with a credit card abroad – Always choose the local currency, I actually just saved 10 EUR yesterday here in the US by choosing USD instead of EUR at the rental car office]
Using Debit and Credit Cards
Visa and Mastercard cards are among the most commonly accepted the world over. However, you might have problems finding small merchants who accept American Express cards. Credit cards that do not charge international transaction fees deserve your attention. If you need to withdraw money from an ATM, use your debit card instead of your credit card. This is because the latter would attract a cash advance fee and you would start paying interest from the day of the transaction.
Make Payments in Advance
Consider paying for your accommodation and car rental before you leave your home country. This way, you don’t have to worry about negative fluctuations in exchange rates to have an effect on your budget. Several overseas money transfer companies gives Europeans easy means to carry out cross-border fund transfers in an affordable manner. Some of your options include XE Money Transfer, TransferWise, WorldFirst, and OFX.
Feeling overwhelmed when going on your first overseas holiday is not out of place. Fortunately, as long as you follow the guidelines discussed in this article, you will have little to worry about on the financial front. Then, all you need to focus on is having a great time.
About the Author
Gavan Smythe is the founder of iCompareFX, an online platform that lets you compare the world’s best international money transfer companies across offered services and features. Outside of work, He is usually found spending time with his family.
EU Passenger rights
And here is a bonus and actually a very important tip from my side. If you are travelling from or to Europe, you are protected by the EU Passenger Rights. If a flight is delayed by a minimum of three hours you are entitled to receive a compensation from 250 EUR up to 600 EUR (in case of a delay of more than 4 hours and 3 500 km). The important thing here is that you will have to claim yourself, there are forms available for compensation on the airlines’ websites or you can use the form linked above.
When I flew to Mexico from Belgium 4 years ago, a connecting flight was delayed and I lost a day of holidays and a night paid at the hotel. I immediately went to the airline counter to ask for a record that the airline company was late, filled out the necessary forms and asked for a refund of 600 EUR per person (we were two). I got an answer back while I was in Mexico that I would be paid 8 weeks later, I tracked it and it worked. We got 1200 EUR back!
Bringing it all together
Whether you are from Europe, US or Kuala Lumpur, the good thing with those tips is that you can all go through them before you actually leave your home for that exciting trip abroad! You can check your travel insurance coverage today for instance.
Having figured out most of the tips beforehand will spare you from worrying during the trip. And you will be able to enjoy good times diving in Ecuador, cycle on the Golden Gate Bridge, meet locals and/or fellow travellers, relax with your family and friends or simply enjoying the rich variety of foods in Singapore (the food courts are awesome). All stress-free, that is what vacations are all about, right?
What about you, amigo? Have you faced one of these mistakes while travelling like I did? Any other money experience during travelling we have forgotten? Let me know in the comments below.
And if you have a friend planning to travel overseas soon, make sure you share the article with him or her!
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