In line with our risk management framework, today we published our Q4 2019 performance update.
5 easy ways to beat the Brexit holiday crunch
The vote in favour of Brexit at the recent EU referendum has produced a mixed set of consequences, to say the least. But one reality we’re all getting to grips with is the decline in the value of the pound. Although the ship has steadied somewhat in recent days, and the outlook is slightly less pessimistic than it was a week or two ago, seeing our currency slump to 31-year lows has been most unnerving.
Those feeling as dismayed as any are holidaymakers. The summer is allegedly upon us, but as the weather continues to be, er, inconsistent, the urge to hop on a plane to Europe or elsewhere burns all the more. But chances are the purse strings have had to be tightened before you’ve even packed your bags as a result of the pound’s recent performance – or lack thereof.
So, how to still make your pennies go a long way then? We’ve got a 5-step plan to help ensure that you still get to have all the fun and relaxation you imagined, but without burning a hole in your pocket.
1. Booking your flights
There are all sorts of nuances for getting the best deal on flight tickets – be that the EasyJet trick of booking a flexi-fare ticket outside of school holidays, only to later switch it back to your preferred dates; free of charge. Or using foreign travel agents for flight bookings. But one thing we’d definitely recommend is to pay by credit card if your flights or package holiday costs more than £100. That way, you are afforded full cover as per Section 75 of the Consumer Credit Act, and the card company is liable if the airline goes bust. Just be sure to pay the outstanding balance of the card off by the end of the month to avoid hefty interest charges.
2. Choosing the right specialist cards
Certain specialist credit cards such as Creation Everyday and Halifax Clarity have no exchange fee, meaning you get the ‘perfect rate’, without any additional fees. So, provided you are able to pay the balance off in full by the end of the month, it is the cheapest way to convert currency.
There is a credit score check for cards like these though. So, if you prefer, Travelex’s Supercard is available to anyone, and also offers the ‘perfect rate’ (as per Mastercard rates). Just be wary of cash withdrawals, as there is a 2.99 per cent fee associated with this.
3. Pay in euros!
If you go down the specialist card route, be sure to pay in the local currency if asked each time you use it. The reason for this is that, if you pay in pounds, the ATM, restaurant, bank or shop you swipe at will do the conversion – rather than your own card – and their rates, particularly on the continent, tend to be abysmal as a general rule.
4. Exchange currency like a pro
If you prefer to have cash in hand rather than card, that’s okay too. The important thing is to choose the exchange provider wisely. The MoneySavingExpert travel comparison tool gives you a good idea of the most competitive exchange rates across a wide range of currencies. But, failing that, the most important rule of thumb is to not change money at places such as airports, hotels and banks. Chances are, you’ll get ripped off.
5. Be smart with finance
Just over 20 per cent of Brits who set off on holiday do so using finance of some kind. The key is to do this wisely, and to leave yourself with a feasible repayment structure that isn’t going to add to your stress levels upon your return. In the right circumstances, we’re obviously proponents of low-cost personal loans for the purpose of holidays, while many homeowners are able to increase their mortgage if they need extra funds. But the best advice we could give is to avoid relying on your UK credit card to fund the trip, as this could mean forking out a lot of money in interest if you don’t pay the balance off within the same month.
Of course, there are many other ways to boost or preserve the holiday kitty. Booking things like car hire and day trips before you leave will almost certainly result in savings, while asking locals once you’re there for the best places to eat and activities to do should help to keep you out of tourist traps. Another thing to consider is if you’ve been delayed for an EU-regulated flight by more than three hours over the last six years, you could be in line for handsome compensation (if the airline is to blame) as per the recent ruling by the European Court of Justice.
All in all, there is plenty of scope for guile, and knowledge of some of these tricks can go a long way to trimming fat off the budget. But there’s also no substitute for sensible spending. That’s not to say you should spend the whole trip counting the pennies. But deciding on a budget, and sticking to it, will ensure that when you return home, there'll be no additional financial burden on you. In fact, the only regret will probably be that you aren’t still on the beach.
Main image 'Holiday' by Joel Gonsalves. Image subject to copyright. A link to the image and appropriate licence can be found here. You must not use or reproduce this image other than in accordance with the licence.
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