From travel cards to airport ATMs, there are ways to make your next trip a little cheaper. Photo / Unsplash
From travel cards to airport ATMs, there are ways to make your next trip a little cheaper. Photo / Unsplash
Memories may be free but the trips you make them on aren’t, especially since the pandemic.
However, if you’re determined to get on that plane, train or cruise ship overseas, there are some common mistakes you may be making when it comes to money abroad.
From currency converters to creditcard charges, we explain some of the most common mistakes.
1. Not preparing ahead of time
If you don’t know local prices, you will almost certainly be ripped off, especially in destinations where bartering and negotiating price is encouraged. The price quoted for a piece of art or item of clothing may seem reasonable compared to back home but has likely been overinflated for tourists, so it’s worth asking locals or researching what a fair price is. Obviously, more urban/official establishments like tour companies, hotels or restaurants will not welcome negotiation but knowing the ‘going rate’ is still helpful. Especially for things you know you will purchase like a taxi from the airport or a tour guide.
When wandering through a market or around a town, it can be handy to know the ‘rough’ conversion rate; a simplified fraction one can quickly calculate. However, when it comes to actually purchasing something, you’ll want to crunch the exact numbers on your phone’s calculator or through a currency conversion app. While rough mental math is good on the go, rounding up or down can result in a big difference in actual price when you check your bank balance. This is especially important if one of the currencies has many zeros, and one could easily be missed.
It's worth whipping out the calculator to check prices in your local currency before purchasing an item. Photo / 123rf
3. Converting currency at the airport
It’s tempting to stop by an airport bureau de change as soon as you arrive at a destination but it’s an urge you should resist. In exchange for convenience, these cash converters typically charge a large markup but in most cases, you will not immediately need cash. Even in countries where cash is still the primary form of payment, a credit card will still likely get you from the airport to accommodation. Set on having a few bills in your back pocket? It’s best to order in advance from your bank or use a debit card at an ATM at your destination.
Not all cards are equal when it comes to overseas transactions. After accounting for transaction fees (often 1.5-2 per cent) and exchange rate mark ups (sometimes up to 3 per cent), you can pay four to five per cent more every time you swipe your credit card. If you have multiple cards, find out what the fees are before travelling or consider using a Wise card, which offers the best exchange rates and charges very low fees.
5. Using a credit card in debt
You can’t always pay off all your debts before a holiday. If you can’t pay off your credit card balance before jetting off, then using a credit card can burden you with additional costs as you’ll not only add to your debt but pay a high interest rate on it. If you want to use your credit card but can’t pay it off, consider alternative ways of freeing up money to get ‘in the black’, like utilizing a flexible mortgage that allows you to draw down and then repay.
Make sure your credit card is paid off before travelling. Photo / 123rf
6. Selecting the incorrect rate
The technical term is Dynamic Currency Conversion but the simple advice is, when shops, restaurants or cash points give you the option to make a card payment in the local currency or your native one, always select the local currency. It’s tempting to pick a currency that is familiar but this means the vendor can choose their own (typically higher) conversion rate. So, always select the local currency.
7. Forgetting about closed currency
Some currencies can only be purchased or exchanged in the country of issue. This means two things; you can only convert your cash once you’ve arrived but also, but you must exchange any leftover cash before leaving. Forgetting to convert cash isn’t just a waste of money (as you will not be able to exchange it back home) but is also typically illegal, as countries with closed currency often have laws against taking currency out of the country. Places with close currencies include India, Morocco, Cuba, Sri Lanka and Tunisia.
8. Forgetting to claim VAT
A 20 per cent discount is always welcome news, especially when shopping on holiday. However, many travellers miss out on this deal by neglecting to claim back VAT. It does take a little effort, as you have to visit an office (typically found in the airport you depart from), with the items and their receipts, which can take a little time. But, if you’ve purchased expensive jewellery, clothing or technology equipment, it can be well worth your while.
