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Money & Rights

Avoid Hidden Holiday Costs

Many extra holiday costs can be avoided by planning in advance- others require you to do a bit of shopping around before you leave the UK, advises Marianne Curphey

Holidays are meant to be an escape from the pressures of everyday life and a chance to rest and unwind. Sometimes, though, they can involve a lot of hassle- extra credit card costs, car hire problems and exclusions in travel insurance policies.

The key to avoiding hidden costs is to understand how and why they crop up. That way, your holiday money will go further, and you won't be stung by unexpected charges. 

Foreign Currency

How to get the best deal: The worst place to buy your holiday money is at the airport because you'll get an inferior exchange rate, It's best to arrange the currency you need in advance. 

Watch out for: Some online foreign exchange services offer great exchange rates but then charge a hefty home delivery fee unless you are ordering more than £599, so compare the cost of postage against the commission rate, especially if you are only exchanging relatively small sums. 

If you are buying currency online, make sure you use a reputable service, as there is little protection if your money doesn't arrive. The currency service divisions of banks, buildings societies, the Post Office and some supermarkets and retailers are authorised  by the Financial Conduct Authority (FCA) and therefore offer some protection.

Best Buys: Search for the current best buys using the MoneySavingExpert currency calculator. 

Deals change as currency services sometimes have special offers, so it is worth planning a month or so in advance. If you feel uncomfortable carrying a lot of money around, especially when  you are at the pool, you can buy a contactless wristband linked to a pre-payment card. The Lyk Waveband links directly to a Lyk Prepaid Mastercard card and is worn on the wrist. Payments are made simply by waving the band over a contactless terminal. However, you'll have to pay £7.99 for the wrist band, and the Lyk card is a pre-paid currency card, which means you'll have to load it up in advance. 

Using your credit card abroad

How to get the best deal: Using the right credit card abroad is the best option for holiday spending- safer and better value than carrying currency or travellers' cheques. You'll get a more competitive rate of exchange and no commission fees. 

Watch out for: It's important to choose the right card, otherwise you'll be hit by hefty overseas fees. Don't use your credit card to withdraw money form foreign ATMs, as you'll be charged a fee and interest from the date of withdrawal. That's because normally, when you use your credit card to withdraw cash, or use it to make a purchase when you are abroad, most banks or card providers will add on a foreign usage fee of between 2.75 and 2.99 percent of the value of the transaction.

This is different from the currency conversion, which is the rate of exchange in place when you make the transaction. The currency conversion is also set by your bank or card provider but varies in accordance with exchange rates.

Best buys: The Halifax Clarity card has no fees on worldwide spending. If you are given the option to purchase in local currency or sterling at a shop or restaurant, you should always choose the local currency because you will benefit from the credit card provider's exchange rate, rather than the merchant's rate, which is likely to be inferior. 

M&S Bank cardholders don't get charged a cash advance fee, and they get preferential rates on currency if they used their M&S credit card to order M&S travel money. The card has 55 days of interest free credit, even for purchases made abroad. 

Sainsbury's bank offers offer better rates for Nectar Card holders and sero percent commission plus free delivery on orders worth £500 or more. 

If you are taking out a card specially for overseas spending, you need to apply in advance for your credit card, and when you receive the card make sure you activate it and let your provider know where you will be using it abroad, so that it is not blocked. Using your credit card to make purchases over £100 also gives you some protection if something goes wrong. 

Holiday Car Hire

How to get the best deal: You should shop around and choose a deal before you leave the UK, as this should mean you get the vehicle you want at the right price for you. 

What you need to know: If a hire car is stolen or damaged, the hirer is liable for the first part of any claim and the excess can be up to £2000 in Europe. Excess waiver insurance is available to protect drivers from this risk but car rental companies charge up to £180 for this extra cover. You don't have to purchase it form the rental company. You can but a standalone policy for up to 65 percent less before you leabe the UK from iCarhireinsurance.com

Watch out for: According to a survey by Opinium, nearly a fifth (18 percent) of car hirers have been told by a rental company at the pick-up point that their credit card will not authorise the deposit amount. For this reason, it is worth taking two credit cards, in case the deposit pushes you over your card's credit limit and stops you spending elsewhere on food or entertainment, for example. This is also true of some hotels which may ask you to put down a deposit for expenses incurred on your room. 

Sometimes this deposit, while not actually spent, reduces the available credit balance on your credit card. Taking two cards is therefore a good precaution, even if you are not planning to hire a car.

Unfortunately, some car hire companies abroad have been the subject of complaints about hidden extra costs or unfair changes. 

According to iCarhireinsureance.com, many travellers are still not factoring in 'extras' at the rental desk when they're hiring a car. 

If a family purchases an additional driver (£68), a sat nav (£102), a child's car seat (£82) car hire excess insurance waiver (£83), super theft waiver (£75) and tyre and windscreen excess waiver (£18) for a week this August in Spain, it will add an additional £428 to the original car hire price of £301. 

The other hidden cost is extortionate refuelling charges. These are often added to your car hire bill or offered in advance when you pick up the vehicle. Make sure you leave plenty of time to return you car, so you can visit a petrol station before you drop off your hire vehicle. Make sure you know how to open the petrol tank, and what sort of fuel you need. It sounds obvious but it is easy to get flustered if you are running out of time. 

Travel insurance policies

How to get the best deal: Shop around for insurance but don't leave it too late. Cancellation is one of the main reasons for claiming, and leaving it late could mean you are not covered. It is important to get good holiday insurance and not buy on prove alone. 

Figures from Saga show that one in five people had made a claim for medical treatment on holiday since they turned 50; one in eight has had to abandon their holiday; and one in ten has made a claim for lost baggage. 

Watch out for: Although it is common for people to cut down on some elements of insurance such as cancellation, baggage or medical cover, these are the areas of cover that are often needed most. Within the past 12 months, Saga Travel Insurance has paid out £206,000 for a claim in the USA, £73,500 in Greece and £48,500 in Turkey.

If you have a pre-existing medical condition you'll need to declare it, and potentially fill in extra forms.

Don't rely on the European Health Insurance Card (EHIC), formally the E111, as a substitute for medical insurance. At the time of writing it's not clear whether it will still be valid after Brexit. 

Best buys: Saga provides 24/7 worldwide holiday rescue, up to £10,000 cancellation cover, scheduled airline failure and delayed flight assistance. For those with medical conditions, you can compare policies hereIf you travel abroad a couple of times a year or are going to be away for a long time, annual travel insurance may work out cheaper than a series of single trip policies. 

Cheap flights

How to get the best deal: Flexibility is the key, as is being willing to travel at less popular times of the day and night. Be aware that some very cheap flights go to smaller, les convenient airports, so check how far you'll be from the places you want to visit, and whether staying outside the main city is what you want. 

You can save money but not reserving an airline seat although you may find your party is split up and distributed around the plane. The earlier you check in, the greater your chance of sitting together, but with online check-in available in advance, there's no guarantee of that.

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