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Things to remember if you are planning your next vacation abroad

Planning a trip requires gathering a bit of information, some understanding of your finances and a lot of active organisation. (Photo: iStock)Premium
Planning a trip requires gathering a bit of information, some understanding of your finances and a lot of active organisation. (Photo: iStock)

It’s never too early to create a travel fund, where you can direct a portion of your earnings solely toward your getaway. Get a rough idea of where you want to go, how long you want to be there, and what you’d like to do

If you are planning a vacation that has been long overdue due to the covid-19 pandemic, there could be more things to consider than just a bucket list of fun. Besides covid appropriate protocols, it’s a good idea to keep in mind your finances. Planning a trip requires gathering a bit of information, some understanding of your finances and a lot of active organisation, especially if you are travelling abroad. At times, there can be a lack of general awareness among travellers about their fund management when they set out for their expedition.

Here are a few key tips to keep in mind as you set out decoding and decluttering your finances before your next big adventure:

Create an airtight travel budget

It’s never too early to create a travel fund, where you can direct a portion of your earnings solely toward your getaway. Get a rough idea of where you want to go, how long you want to be there, and what you’d like to do. Decide what’s important for you, for example, when visiting a city, you can cut costs on accommodation and food, but set out larger amounts for sightseeing and shopping. Aim to set aside a fixed amount every month to go into your travel fund. You can use an app or financial management tool on your phone to track your spending and stick to the budget.

Avoid getting your travel money at the airport

Rashmi Satpute, country manager India, Wise - global technology company, said foreign exchange bureaus at airports typically know just how to play on traveller’s excitement to reel you in, and offer the least bang for your buck. This can be due to the exorbitant costs of exchanging currency at the airport which eats into your travel budget. “Don’t buy into “zero commission" deals either – you’ll still be ripped off by unfavourable rates. To know which rate is most favourable, look for the exchange rate that’s closest to the mid-market rate as presented on Google/Reuters. To save money, organise your holiday money well before you get to the airport," Satpute said.

The dangers of Dynamic Currency Conversion on cards

Dynamic Currency Conversion (DCC) is a service offered by banks and payment providers that gives international cardholders a choice to pay in their home currency when they travel abroad. This is often advertised as a safe, convenient option for travellers that offers the benefit of choice- to convert the value of their purchase into their home currency or complete the transaction using the local currency. “The misconception is that DCC helps you avoid foreign transaction fees on credit cards- it, in fact, does not. If you agree to a merchant’s offer to use DCC when you make the purchase, that exchange will also be subject to any foreign transaction fee levied by your credit card, debit card, or ATM network- and these markups are typically exorbitant. These fees typically add up to between 1.5% and 3% or even more on the transaction amount, and it’s difficult to know what the true rate really is. So, exercise the benefit of choice- pay in the local currency only. Decline any merchant’s offer to convert your currency for purchase and find a multi-currency travelling card that does not charge a transaction fee," Satpute said.

Don’t forget travel insurance

It’s a lot less expensive to manage disruptions like baggage/document loss, delayed travel, personal accidents, dental & other medical emergencies and senior citizen health concerns when you’re insured with the right insurance plan. However, as with everything, choosing the right insurance plan is of paramount importance. Satpute said, “Different institutions vary in terms of the amount of coverage they offer, but it is safe to assume coverage within the range of $50,000 to $500,000 per your needs and package chosen. There is no ‘one-size-fits-all’ approach that applies, so the travellers are encouraged to read, research and see what plans are being offered to you by your bank and other service providers."

Get a multi-currency travel card

Even though using debit or credit cards abroad is often the most convenient and safe option, the best way to go about it is to get a multi-currency travel card. These kinds of cards can be picked up before you leave home, and topped up online. You then select the currency you need when you’re abroad, and switch your balance, so you know exactly how much you have in the foreign currency, and there should be no surprise fees or costs associated with exchange rate fluctuations. Since your prepaid travel card isn’t linked to any of your other accounts, it is unlikely that you would be a victim of fraud or lose your card and PIN.

Avoid ATM withdrawal fees

You are bound to withdraw money more frequently when you travel, in order to retain your mobility and stay safe. However, over the course of your travels, the more you withdraw, the more ATM withdrawal fees levied, add up. “To avoid these, look up if you can get a card in the global ATM alliance, where these fees can be waived off if you use any partner ATM around the world. Moreover, speak to your bank or service provider, to see how you can get your hands on a low fee card," Satpute said.

Use the right platform for money transfers

Bank transfers from around the world are beset with hidden fees-- from transaction costs to exchange rate spreads and even correspondent bank fees. Satpute said, “This can be a complex web to navigate if you need your money to reach someone back home rapidly, safely and effectively. To make the process easier, use a reliable mobile app or tech platform that transparently transfers money as per the mid-market rate and keeps you updated on the details of your transactions from end to end."

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