Just when you thought it was safe to start spending again, John Lowe, The Money Doctor, has three quick holiday tips for those thinking of taking the plunge this year and going on holiday.
1. Saving for your holidays
If you have no savings plan at this stage that will pay for the holiday and all ancillary costs – a euphemism for drink! – then forget going away, unless:
a. some benefactor is funding your trip;
b. you have the means to repay a loan to fund the holiday over the balance of the year, so that come January 2014 you are debt-free to start saving for next year’s holiday.
All the deposit-takers operate savings accounts called REGULAR SAVER ACCOUNTS where you can save between €100 and €1,000 each month for up to 12 months at very attractive rates. Currently, the best are KBC Bank (3.5%) and EBS (3.1%), but it is the discipline of saving that is important and not just for holidays: Christmas, birthdays, anniversaries, new golf clubs, the eight-year-old VW Golf GTI... All capital costs and we all need to get into the habit of saving.
2. Credit and debit cards
If you are travelling in the eurozone, you can use your debit card (with the Maestro, Cirrus, Plus or Link symbol) at an ATM or in-store to make a purchase and it does not cost any more than it would at home. But if you’re travelling to a non-euro country like the UK, or outside Europe, using your debit card at the ATM or making a purchase will cost you. You will be charged a transaction fee and a foreign-exchange fee. Ask your own financial institution what these are and work out if it is cheaper to exchange currency in advance.
If you use your credit card at the ATM or in-store, you will be charged a transaction fee whether you are in the eurozone or not. You can add currency conversion fees to that if you’re outside the eurozone.
Try lodging your holiday money to your credit card to avoid paying cash withdrawal fees at the ATM, but be warned – some banks still charge a fee, so double check with your bank before you travel to avoid nasty surprises when you come back.
My tip: If you are travelling to the UK or the US, try out the new An Post prepaid credit card, called the PostFX prepaid MasterCard currency card, where you can change your euro into dollars or sterling commission-free, safely and at a competitive rate.
3. Roaming charges on mobile phones
On 1 July 2012, the last EU price caps on roaming charges came into effect. They are currently 29c per minute to make a call, 8c to take a call, 9c per text and 70c per megabyte for data downloads (all prices excluding VAT).
There is also a limit of €50 for data downloads (unless you’ve agreed otherwise with your network), and your network has to alert you when you reach 80% of that spend. Once you reach the €50 limit you will be given the option to keep going and spend more, or else you will be cut off. Since 1 July 2012, this applies when you are roaming outside of the EU also.
However, bear in mind that you may get even better deals from your network provider under their roaming packages, a lot of which are free, but you have to actively sign up for them. For example, if you opt in to Meteor’s Europe roaming offer the charges are cheaper than the maximum cut-off charges and there’s no charge at all for taking a call. And with Vodafone you can opt in for data downloads at €2 per day for 500MB, which is significantly cheaper than the 70c per megabyte cut-off under the EU rules.
My tip: Turn off your data roaming on your mobile and only use Wi-Fi if and when available. If there is no Wi-Fi connection, do without until you return.
Have fun wherever you are going and happy holidays!
John Lowe is managing director of Providence Finance Services Ltd trading as The Money Doctor, regulated by the Central Bank and based in Stillorgan, Co. Dublin. He is author of The Money Doctor 2013 (Gill Books). For consultations and corporate seminars, call (01) 278 5555 or email email@example.com or firstname.lastname@example.org. Follow John on Twitter (@themoneydoc), LinkedIn and Facebook.