It is nearly summer and nature is healing. Migratory patterns are in motion. Skyscanner and Google Flights are spread across two computer monitors. Suitcases are being lugged down from the attic. Flip flops are being purchased. Promises are being reneged. “I know last year I said we were never going Ryanair again but they’ve got flights for €80 return to Spain...”
We are taking time off and going away. Whether we’re heading off to Lahinch or Lanzhou, this is a trip we’ve saved for, booked and looked forward to for weeks. So it’s easy to overlook the fine print on a booking, or overspend on the credit card and accept eye-watering currency conversion fees at a beachside bar’s ATM. Things that can all be waved away with the handy “ahh, we’re on our holidays!” excuse.
But the holiday has to end at some point and no one likes looking at their bank statements with mysterious charges feeling short changed and ripped off, cancelling out all the relaxation a break was meant to buy in the first place.
So before we head off this year, here’s a list of common holiday mistakes to steer clear of in the manner of a dodgy seafood buffet.
1. Failing to budget beforehand
Running out of money while sitting poolside and ordering cocktails makes it tempting to put purchases on a credit card to keep the good times rolling. But with most Irish credit cards hovering around an APR of 22 per cent, that compound interest could see you paying a lot more for those Cosmos than you originally bargained for. It can also make it trickier to “just catch up” when you come back by having to budget even harder to make up the difference, leading to post-holiday misery and eventual blowouts.
According to author and money expert Eoin McGee, the best time to start budgeting for a holiday is straight after you have come home from one. “That’s the best time to total everything up that you’ve spent and figure out how much it actually cost you,” he said.
“If you go away every year or every second year, then you can plan ahead which means you will be less likely to take out a loan.”
If a trip for a family of four to Italy during the peak season costs €4,200 all in, then putting aside €350 a month into a separate bank account marked holiday fund should decrease the need to rely on loans and credit cards to fund next year’s vacation.
However, it’s important to recognise that not everyone has the financial privilege of taking the family on holidays without a bit of help from the bank. Different people have different spending priorities. For some, making memories and having the break they feel they deserve after working hard all year is worth going into debt for. This isn’t the end of the world as long as it’s done within reason and, for McGee, as long as it doesn’t create a yearly cycle.
“If you do decide to borrow money, try to borrow it only for a six-month term and for the other six months save so you don’t have to borrow again for a holiday,” he said.
“A big mistake I see is people put it on a 12-month loan but end up taking a loan again the same time next year.”
Segregating daily spending money into an old fashioned envelope system either physically or by newfangled technology can also stop creeping “but I’m on holiday” costs.
“Use the hotel safe deposit box to store cash. If you have €100 a day to spend, take out only that €100. People are much more likely to work their way through more if they’re tapping away on their card,” he said.
If the thought of carrying around cash makes you nervous, this is where the app features of fintechs come in handy. For example, Revolut’s “vaults” feature allows users to store money in a segregated space.
McGee advises transferring the overall holiday budget sum out of the main account attached to the debit card and to put the daily budget into the main account as you go. “You can then see how much is coming out of your daily spend when you open the app,” he said.
2. Being stung by fees abroad
From ATM fees to dynamic currency conversion levies, there are lots of ways to have your precious holiday cash snipped by banking charges. Thankfully most Irish banks don’t charge customers above their usual fees for using debit cards inside countries using the euro. However, foreign ATMs can place their own fees on top so it pays to really concentrate on what the screen is telling you when you go to take out cash.
In particular, Euronet ATMs have faced criticism for applying charges of up to €3.95 per withdrawal in European countries. The company has also been accused of offering less than favourable exchange rates under “dynamic currency charges” meaning those changing pounds or American dollars to euros are coming away from the cash point with a lot less cash than they were expecting.
Nilan Peiris, chief product officer at Wise, a global fintech, said Irish holidaymakers could protect their budgets by “paying in the local currency” when out of the euro zone and “being savvy about which ATMs you withdraw money from”.
“When paying with your card, or taking money out at an ATM, you’re sometimes given the option to pay either in euro or the local currency. Make sure that you choose to pay in the local currency,” he said. “Otherwise, the bank or card provider will charge you an unknown, likely sky-high conversion rate, on top of a foreign transaction fee.”
Seeking out the ATMs of established banks may leave visitors less vulnerable to being stuck using independent ATMs in convenient locations with very inconvenient fees.
Lastly, taking out cash on a credit card in a foreign currency should be avoided at all costs with some banks charging up to 2.5-3 per cent on the transaction value including cash advance and cross-border handling fees.
Cross-border handling and conversion fees on debit cards mean it’s unwise to make large purchases on some Irish debit cards as they take a percentage of the overall transaction. Using fintech providers and cards with no or low fees could help you avoid the extra bill.
3. Not reading the fine print on your booking
This starts before you click purchase on that all-inclusive holiday package. Know exactly what is included in the full-board and half-board options. Cross check with online reviews as often certain areas including entire pools and bars are only available to guests who opt for a premium package. Things like spas and thermal suites may cost extra to access. The worst example Money Matters encountered was an all-inclusive resort which stated “additional costs apply” for guests using the disabled access pool lift.
The good news, according to a spokesperson for the Competition and Consumer Protection Commission, is “if you book a package holiday, you have strong rights and protections”.
“If the company makes a significant change to the holiday such as changes to price, dates, accommodation or if they cancel the trip, they must offer you: a replacement holiday of equivalent or superior quality or a lower grade holiday with a refund of the difference in price if they can provide this or a full refund.”
If a package holiday has a requirement for guests to hold travel insurance, you are not required to book the policy the company happens to be promoting. You can use your own coverage as long as it is adequate for the terms and conditions.
When it comes to flights, always factor in baggage over snapping up the cheapest deal. Mark Murphy, expert bargain hunter and founder of Irishflights.ie, says baggage is where budget flights might end up costing you more.
“What Ryanair and Aer Lingus give you on their cheapest fare is very different. Ryanair will give you a small under-seat bag whereas Aer Lingus will give you a 10kg checked bag on their cheapest fare,” he said. “Make sure to price up both options.”
If you do choose the no-frills under-seat baggage allowance, don’t try to sneak on a bigger bag. Spare yourself the extortionate fees and the indignity of having to shove it unsuccessfully into the little silver cage of punishment at the boarding gate to try to prove it will fit to cranky airline staff.
Not when “there’s a bag in Decathlon for €6 and it’s the exact dimensions of the Ryanair under-seat bag”, according to Murphy.
Make sure the only traps you end up on holidays this year are tourist ones, not the money kind.