Five holiday-budget spoilers

2012-11-19 08:47

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As bonus season rolls round and you look at adding that final savings injection into your dream break plans, there are a few things you might have overlooked that could seriously dent your holiday spending power.

While you may have crunched the numbers around the key expenses such as travel and accommodation, have you considered the following?

Travel insurance and visas
There are many reasons to take out travel insurance – Hurricane Sandy being a very real reminder of how things can unexpectedly go pear-shaped – reports reveal a total of 7 000 flights have been cancelled in the past few days. While most airlines offer some sort of refund on flights they have had to cancel, they cannot be held liable for other bookings you might need to forfeit because of it. In this case travel insurance can be a lifesaver, especially if you find yourself stranded or having to foot the bill for accommodation you couldn’t use in the first place – don’t overlook this necessary expense but shop around to make sure you’re getting the best value.

Another factor to consider would be visa costs. If you’re unfamiliar with these, take a look at the following visa processes and budget accordingly. Otherwise you may want to check out these visa free destinations for South Africans.

-    US visa cost: about R950 ($140 depending on the exchange rate)
-    Shengen visa cost: about R680 for the transit and short stay visas)
-    UK visa cost: about R912 for General visitors visas  and about R612 transit visa

These are current rates at the time of this publication and subject to change, so verify applicable visa fees when posting the application.

Airport purchases

While some expenses such as travel insurance shouldn’t be skirted – there are a few you can avoid all together, particularly costly airport purchases.

It is said the most expensive place to purchase foreign currency is at the airport. A simple solution might be to check for those bureau de change outlets that allow you buy the currency online, with a special online rate, and then pick it up at the airport beforehand. Just be sure to allow enough time to do this before boarding your flight. Otherwise, a pre-loaded currency card, which essentially operates like a debit card is also a good idea and possibly one of the cheapest ways to secure your holiday spending money in the preferred currency beforehand.

It is also a good idea to keep in mind obvious things like flight delays by packing some just-in-case snacks. Purchasing fresh goods can be quite expensive at airports. On the flip side it can’t hurt to preplan purchasing gifts or items available tax or duty free. Some stores also offer online services, allowing you to secure the items beforehand but that only need to be collected on the final departure - keeping in mind all goods purchased on the start of your journey will need to be lugged around with you. Certainly not a great idea if you look at the next item that could potential dent your holiday spending budget.

Baggage fees

Tough economic times have seen airlines become quite innovative – but not always in a good way.  Some have resorted to extreme measures such as threatening to remove toilets from aircrafts altogether and asking flight attendants to lose weight.

But the most common area were passengers have to cough up would be taxes added to ticket prices and baggage policy fees. Local airlines such as Kulula and South Africa Airways have implemented the piece baggage policy – said to be standard practice with many overseas carriers. Kulula only allow you to check in one bag, weighing less than 20kg. Any bag weighing more than this will be charged a once off fee of R250, add to that an additional R300 for any extra bags on top of this.

You’d be wise to familiarize yourself with the policy of your chosen airline and pack according, as penalties can sometimes be hefty. Arm yourself with a list if you do plan on buying gifts and make sure you have the necessary suitcase space available to be able to bring these items back home.

Currency exchanges

Plastic fans gloat that you get a better exchange rate by using a card instead of buying the forex before you go. This may be true only if you have a card with particularly low fees. Irrespective, choosing to make purchases or withdrawals with your credit card always means you’re absorbing costs somewhere along the line for using the banks money instead of your own - you're simply not aware of it because it's been seamlessly worked into the credit system. When using your credit card on holiday be aware of what is known as the forward exchange rate. This is a specific rate agreed upon to exchange one currency for another at a specified future date. The forward exchange rate acts as a buffer for settlements made by card, safeguarding institutions for delayed transfer of funds and any exchange rate fluctuations that may occur during this time. Thus it is always higher than the current exchange rate. It might be better to opt for securing your holiday budget with ‘a fixed exchange rate’ which you get when  you preload your currency on to a prepaid travel card, guarding you against major exchange rate fluctuation.

Roaming rates and push data

If there is one thing most people forget in the excitement of sharing their holiday experiences via social media networks such as Facebook or Twitter, it is the high cost of roaming. Forgetting to put off those push data alerts can rack-up an unbelievable amount of data costs. The simplest solution is to research any network sharing agreements your provider may have with overseas providers. Alternatively, switch off all data alerts and tell people not to call you while you’re away as you will be picking up the network expenses for the long-distance chitchat. The least inexpensive solution, especially if you want to stay connected with the people you happen to be travelling with, would be to purchase a sim card once you’ve arrived at your destination and make use of pre-paid connectivity. It’s also a good idea to target places that offer free wi-fi if you really want to do the odd update and catch-up on emails.

Check out the American Express® GlobalTravel Card which provides an enhanced level of security since it is not linked to your actual bank account. Cash is preloaded ahead of your trip and you’re able to fix the exchange rate in the moment of purchase, improving your spending power and alleviating the risk associated with volatile exchange rates. Another key benefit is the free Backup Card (with a different PIN) that gets issued along with the Primary Card at purchase.  

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