Want a hassle-free holiday abroad this Christmas? Take care of these money matters

It’s time to pack your bags and take that much-needed break, what with the New Year dawning in less than a couple of weeks. International flights are allowed for destinations such as Canada, UAE, USA, Thailand, Brazil, Maldives and Bali.

But before you catch your flight, there are some important money matters to take care of.

Take a separate forex card

The best way to pay when travelling abroad is through a forex card. These are cards that are denominated in foreign currencies. The US Dollar, UK Pound, Euro, Dirham and Singapore Dollar are currencies made available via forex cards. For other currencies, you can still use a US Dollar-denominated card, as that is typically accepted in most countries.

Forex cards don’t come with hefty currency charges and transaction fee, unlike credit cards. Ananth Reddy, MD, Electrum Financial points out that of late, rupee-denominated international cards have also been launched, which can be used in at least 150 countries,” says Reddy.

Companies such as Niyo and HOP offer rupee-denominated international debit cards, while Happay offers a pre-loaded rupee international card. DCB, State Bank of Mauritius, Yes Bank and Equitas have entered into a tie-up for offering these global cards to account holders. “These cards are immediately activated. The conversion rate is 1 percent, as compared with 2-2.5 percent on incumbent forex cards,” says Reddy.

These cards can be loaded using an app and can also be blocked if you sense any compromise, fraud or theft.

Should you use your credit card abroad?

Use your credit card as little as possible. But carry your card if you already have one. Some cards give you a choice to either pay in your home currency or the local (foreign) currency. You would know the amount only after you receive the statement or bill.

Opt for the local (foreign) currency, else you would have to shell out 10-12 percent fee as dynamic currency conversion (DCC) instead of just a 3.5 percent currency mark-up charged by the bank or card issuer.

“A wide segment of travellers predominantly use their existing debit and credit cards, which is not the best way to operate in a foreign land due to fraud perspective. It could affect your account balances and if the bank detects any compromise, then getting back on track is cumbersome,” says Reddy.

The costliest option is to withdraw cash using your ATM card abroad. Now, the DCC you pay on your credit card would be cheaper than the 36-48 percent annual interest on the withdrawal amount that is considered as “cash advance.”

If you fail to inform your bank and use your card abroad, your bank might flag your transaction as fraud and block it.

Cash is still needed

You must carry some cash with you. Taxis and buses in many countries still insist on cash payments. Tips in restaurants are a big thing and they expect cash. Carry around 30-40 percent of your holiday pocket money in cash. In case nothing else works  or for large purchases, use a credit card.

Be aware of cancellation charges

Your holidays should be cancellation proof as far as possible. Who knows, the new COVID variant may play spoilsport.

In these times, it’s best to limit using online travel sites for booking air tickets and hotels, especially if you are traveling as a group. Online travel websites often show you the cheapest fare first, which is usually the no-cancellation fare.

“Since brick-and-mortar travel agents are aware of the cancellation terms and refund norms, they can assist you in selecting the apt airlines based on your individual situation during the current uncertain period,” says Chetan Momaya, proprietor Olympia Travels & Tours. “If you wish to purchase only a couple of tickets, then you can opt for online aggregators. But if you are looking to purchase for a family of 7-8 people, then you should look for an offline travel agent, who holds a pre-purchased inventory of tickets,” Momaya adds.

Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations Of India says that hotels have been offering good discounts to incentivise people to travel in these times. “Do check the cancellation rules before booking, as these would differ. Regular norms do not apply because these are not regular times,” says Kohli.

Your insurance must include COVID-19 emergencies

With RT-PCR tests being mandated at various airports and destinations, you could lose a large savings pool if you contract COVID-19. As Adarsh Agarwal, appointed actuary at Go Digit General Insurance suggests, “Should you turn positive as part of the mandatory RT-PCR tests while travelling abroad, check whether your policy would extend the travel insurance validity, because a positive result would require you to extend your stay. This will help minimize losses.”

“Insurance benefits often have a maximum travel time associated with them (typically for 30-45 days with a six-month validity on single-trip entries, or 365 days validity with a per-trip capping for multiple entries,” recommends Nayan Ananda Goswami, Head-Group Business and Retail Sales & Service at SANA Insurance Brokers.

Travel insurance typically covers you for loss due to baggage theft and airline delay or health and related hospitalisation expenses.

“If your policy does not include a medical cover, then health complications arising out of COVID-19 will not be covered. Also, medical benefits can be claimed only if the policyholder is hospitalized. Only a few products cover out-patient treatment,” says Agarwal. To avoid any claim rejections, declare your existing condition while purchasing the cover, and ensure that it is not noted as an exclusion in the travel insurance policy, suggests Goswami.