If you’re going on an overseas holiday over the summer you’re probably counting down the hours by now, if not the minutes.
You might also be putting together the finishing touches to your break, which may include working out your budget and perhaps worrying about the costs that could mount up. Because while the flights and accommodation tend to be the biggest outgoings, other expenses can mount up quickly, especially if you’re going with children. Careful planning can go a long way to reducing the financial stress and avoiding the hidden costs that can sabotage your budget.
Weigh up your travel money strategy
Most bank cards cost money to use overseas, so simply paying for everything contactless on your existing card could be expensive. Check your provider’s foreign purchase fees – if your provider charges a hefty fee for each purchase, search for cards with fee-free spending, as there are several available.
If you don’t want to apply for a credit card, you could get a prepaid currency card, such as those offered by FairFX, Caxton or Post Office. These cards can be pre-loaded and then used in the same way as a debit card, but with no transaction fees. They also allow you to lock in an exchange rate, which is handy when markets fluctuate. Prepaid cards are great for budgeting too, as you can only spend what you have put onto the card.
If you’re buying currency, do it online before you go. Many families end up getting their currency at the airport, but this is the most expensive option. Instead, order your currency online to get the best deal. You can have it delivered to your house or even pick it up at the airport, where available.
Be canny with your travel insurance
More than a fifth of holidaymakers risked travelling without insurance on their last overseas trip, according to research from Go.Compare Travel. But it also reported that of those that did take out travel insurance, 23% ended up making a claim – usually because of lost baggage, transport delays and medical expenses. In other words, skipping the travel insurance bit can be a false economy.
But don’t buy insurance from your travel agent. It’ll almost certainly be cheaper through an insurer or on a comparison website, but make sure the policy covers your needs. Also consider buying an annual policy if you’re likely to go overseas more than once over the next 12 months, as this will work out cheaper than a single trip policy. Make sure you shop around, and check if you already have travel cover through your employer or a packaged bank account. Don’t leave it until the last minute – the best bet is to get it sorted as soon as you’ve booked your trip.
Plan ahead
If you’re planning to go on some excursions or go to specific theme parks, then book these in advance to save money. If going to theme parks for example, buy advance park tickets online, which will cost less than buying them on the day. You can often find deals on tourist websites for eating out, as well as guides and maps that you can download. This will save you time as well as money, allowing you to skip the ticket queue. Similarly, try to book car hire, taxis and other travel expenses before you get to your destination. Planning ahead can keep you in control of your money.
Set a realistic budget
When budgeting for a holiday, include all types of costs and not just the price of the holiday.
Unexpected outgoings such as airport parking charges, data roaming fees, excess baggage charges and resort or facility fees (that are added to hotel bills) can send your overall holiday costs through the roof. It’s easy to overlook these when setting a holiday budget, so make a list of everything you will need when going away. These costs can take you by surprise unless they are accounted for.
Once you’ve set a budget, keep to it: 67% of people over budget on their last overseas trip by an average of £154.62, according to the 2024 holiday spending report from Post Office Travel Money. And don’t forget that day-to-day costs are going up in a lot of destinations. The Post Office Travel Money survey found that 57% of holidaymakers said rising meal prices sent them over budget, while 32% cited the increased cost of buying food and drink from local shops and supermarkets.
Don’t use your debit card abroad
Many of us rely on our regular credit or debit cards when paying for things on holiday, but using them overseas might land you with hefty fees. Foreign transaction fees are often in the region of 3% and some debit cards also levy flat fees of up to £1.50 for each transaction. You can avoid this by taking a holiday-friendly credit card with no such fees, such as the Halifax Clarity credit card. As well as taking our advice from Step 1, remember while on holiday to always pay in the local currency and not in sterling or euros, as you’ll get a more favourable exchange rate.
Watch out for mobile phone charges
Data roaming allows UK holidaymakers in the EU to connect their mobile phone with the local network and only pay domestic prices, under legislation introduced in 2017. But the UK’s exit from the union means this is now at the discretion of individual mobile phone providers. Check if your provider is among those allowing free data roaming within the EU. If it does, look at the small print – it might start changing once you’ve gone over your UK data allowance, for example.
Data roaming charges are likely to mount up much more outside the EU, so make sure you know what you’re being charged for using your phone. If you go over your data allowance, there will be additional costs to consider. Where possible, always connect to the Wi-Fi that’s increasingly available. Also disable your phone’s data roaming so that it doesn’t automatically connect to the internet and start building up charges.
Set a daily spend limit
Many of us end up breaking the budget when on holiday. To avoid this, set a daily spend limit. There are always additional ways to save money when on holiday, on top of those already mentioned. For example, if you are staying at a nice resort with excellent facilities, make good use of them – it won’t cost you anything extra. When eating out, try out places where the locals eat – these will be cheaper than those centred around tourists. You don’t have to walk far to get to these cafes and restaurants and they could save you a lot of money.
Keep the transaction costs down
Sometimes it’s only when we get home and see the bank statement that we realise how many avoidable card charges we racked up. ATMs are a good example, as some offer fee-free cash withdrawals up to a certain amount whereas others charge a set fee or a percentage of the amount you withdraw.
Similarly, try to select the local currency option when withdrawing cash or paying by card, as you’ll get a more favourable exchange rate. Paying in Sterling might feel more familiar, but traders can set their own exchange rate and many will add extra fees onto the cost.
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