Jetting off - The essential guide to managing money abroad

C&S Insight May 2009

1. Commission-free credit cards
    
2. Travel Insurance
    
3. Pay on credit cards for protection
    
4. Converting currency

Commission-free credit cards

Credit cards are now a popular choice for people travelling abroad because of the added benefits they offer, such as extra convenience and security, and their usefulness in an emergency situation.

Travellers know they can take their credit card with them on holiday and that they will be able to use it in most destinations.

Although Travellers Cheques are still used, they are often no rival to credit cards and taking large quantities of cash is obviously less desirable because it is hard to claim it back if it is stolen.

So, which credit card should be packed along with the passport and sun cream?

There are a range of credit cards on the market but travellers should consider which ones will help them the most when going abroad:

• Some cards offer 0% commission on purchases overseas: These cards do however charge a 2.5% fee for withdrawals made from a cash machine. There is currently a Post Office credit card offering this.
   
• Some providers offer 0% interest on purchases in certain areas of the world. Check with the provider as they may do this. Nationwide are currently offering a card which is commission free for purchases in Europe.
   
• There are some providers that offer emergency help when you are traveling abroad, including prompt card replacement and cash advances should a card be lost or stolen. Barclaycard are one of the providers who offer this to cardholders.

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Travel Insurance

Foregoing travel insurance may be seen as a quick way of saving some money, but if a holidaymaker has an accident while abroad they could find themselves with medical bills costing thousands of pounds, which they, or their families, will have to pay. 

If travellers compare travel insurance, they should be able to find  inexpensive single trip policies starting from around £4.10 – equivalent to the price of a beer in some places.

Travellers can also expect to pay about £10 for a trip lasting less than 30 days in Europe and about £30 for a trip further afield.

It is particularly important to have good insurance cover while travelling with family, especially if the group contains vulnerable members, such as the elderly and children.

Some comprehensive policies will also protect against redundancy, home emergencies and airline failure.

Key things that travel insurance should cover:

• Accident, illness and repatriation
   
• Personal possessions
   
• Cancellation and curtailment
   
• Cash
   
• Legal assistance
   
• Specialist sports cover (e.g. winter sports)

If, for any reason, the Foreign Office advises against travel to any country or location it is strongly advisable that consumers take note. In light of the swine flu outbreak and the FCO’s recent advice, travellers due to fly out to Mexico on holiday will be able to cancel their travel arrangements and claim against their insurance policy. However, if travellers go ahead against this advice they will not be covered by their insurance policy should they fall ill while there. It is advisable to all those considering a trip to Mexico to contact their tour operator and refer to the small print in their insurance policies.

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Pay on credit cards for protection

In times of recession, many people are worried about buying products or services for fear of losing their money if a company goes bust. This was the case when the charter airline XL collapsed in September 2008 leaving hundreds of passengers stranded. One way of avoiding this loss is to pay for goods on a credit card and take advantage of Section 75 of the Consumer Credit Act.

Section 75 means that goods purchased on a credit card are protected when a supplier  breaches  the contract of sale by failing to deliver the goods  or by misrepresentation of the product being purchased. If the company are unable to payout in the event of a consumer making a claim against them, and the product was purchased on a credit card,, then the consumer can claim against the credit card company.

Things to be aware of:

• This does not apply if you pay using most debit cards – However, all credit cards have to abide by Section 75. 
   
• This only applies if the credit has been provided under a ‘pre-existing arrangement’ that involves both the supplier and the credit provider. So credit cards are covered because suppliers are signed up by one firm (called the ‘acquirer’)
   
• Purchases must be £100 or over (up to a limit of £30,000) in order for Section 75 to apply.
   
• ATOL protected holidays and flights also safe guard holidaymakers from losing money or being stranded abroad. It is highly recommended, especially in the recession, to ensure that a holiday carries this protection.

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Converting currency

The best advice for travellers when it comes to converting currency is to be prepared. Leaving currency converting to the last minute has become an all-too-common scenario and it’s the travellers that end up paying the price.

Shopping around for the best offers before leaving for the trip can really save time and money. 

Countries with weaker currencies often allow goods to be paid for with stronger currencies such as Pounds and US Dollars. It’s a good idea to look into this before leaving on your trip - using review sites is one place to start.

It is also important to check how much cash the insurance policy covers. Make sure you keep within this limit and take Travellers Cheques if needs be.

Another way to avoid high commission costs is to sell back your unwanted currency to family or friends, or even friends met when away. It means you will be able to secure a better deal on your conversion than if the currency is exchanged back where it was originally purchased or at any other bureau de change.

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Product Offers
Please ensure that you fully read the terms & conditions of any product or policy before you decide to proceed and are fully aware of the total costs and the benefits and any exclusions or limitations applicable to the product or plan.

Please note that the product links will take you direct to the Issuer or Insurer's site direct and we cannot be held responsible for the information which they provide within their own sites. On some comparison tables we use a star rating which rates products by visitor popularity.