Mums Finance

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

As the holiday season is coming up it would pay to take a quick look over your finances now and see where you could make some adjustments which could see you save some money while you are away. If you are off somewhere in a week or two then maybe it’s a bit last-minute but if you are a month or so away from flying off to catch some sun acting now could certainly work to your advantage.

Which cards will you take?

I am often amazed at how many people do cash advances on their credit cards without any idea of the interest they will be paying. One card we would never be without when we go away is our Nationwide Flexaccount. There are no charges at all for cash withdrawals overseas - having said this, check the machine you are withdrawing from first to see if any independant charges apply, but Nationwide will not charge you themselves for your withdrawal.

If you are going abroad try to have at least one Gold version of one of your cards. Having a Gold Card ensures you protection if your card gets lost or stolen with 24 hour replacement.

Heard about people whose card gets blocked whilst they are overseas leaving them without cash/credit for days? one way to safeguard is to have this formula: one Visa card, one Mastercard and one spare card for emergencies. To take just one card and rely solely on it for spending is asking for trouble if your bank blocks it for security reasons. Bear in mind that many countries do not accept Visa and some do not accept Mastercard - have one of each and be prepared for lifes little emergencies. Don’t forget as well to go for your bills to be issued in the local currency - converting to your home currency (DCC) could cost you extra.

Renting a car?

We always recommend Holiday Autos for the cheapest car hire which is just about world-wide. They are not a car hire firm as such but rather they contract from different agencies and pass their discount onto you. Whenever we use them we almost always get a vehicle from EuropCar. They offer an all-in price which is pre-paid but you get benefits like one-way drop offs for free; have a look at the site and consider them.

Getting your first cash injection:

Believe it or not but the best place to withdraw your cash on arrival at your destination is the airport. The terminal cash machines carry few if next to no charges at all for cash withdrawals so fill your wallet when you get off the plane.

Phoning home:

Taking the mobile? assuming your phone is unlocked (get it done if not) go and buy an international sim-card and stick it in. You will find your calls will be so much cheaper doing this.

Popularity: 15% [?]

If you are planning to take a trip abroad this year and plan to make use of your American credit card do not be surprised if you are handed a bill in US dollars rather than the currency of the country you are in.  This practice is known as dynamic currency conversion (DCC) and is a practice becoming widespread around the world.

On the surface it will seem convenient and simple enough; you will know what you are spending and being charged in your own familiar currency but there is a catch. If you agree to that pre-converted bill you just may well be up for paying higher exhange rates plus credit card fees.

In using DCC the companies take a competitive exchange rate but you will find that they are higher than the interbank exchange rates. DCC is more widely used by firms such as car rental agencies, hotels and high profile department stores such as Harrods. The difference in the rates is due to a cut carried by DCC for the processing bank and the merchant. This is proving to be a goldmine for the merchants of course.

Since April 2005, Visa added a one percent International Service Assessment for all US dollar transactions outside the USA regardless of the currency in which the charge was made. Whether or not the charge gets passed onto you, the customer, is ultimately up to the bank.

One way around this is to demand your bill be issued in local currency - if you are presented with a pre-converted bill ask for it to be converted back to the local currency. You are well within your rights to demand this; if the merchant tries to pressure you into accepting the pre-converted bill ask for a manager as it is against their merchant agreement to refuse this request.

Check the rate:

Should you wish to pay in US dollars when you are presented with the local price ask for the conversion rate and the final price in your US currency.

Check with the bank:

Compare cards; ask your bank what their charges are for foreign transactions - not all banks pass the charges onto their customers.

Popularity: 9% [?]

Last night I saw a report on the television featuring British people who had travelled abroad and then, after frequent spending on their credit card, discovered that the bank had blocked it. I think many people have been stuck in this predicament and it can be extremely embarrassing when it happens.

One fellow and his wife were stranded in New York City and pretty much confined to their hotel room after Capitol One had placed a block on their card during their holiday; they discovered this when it came time for them to pay for a meal. One guy was holidaying in Italy when he discovered his card was blocked by Abbey; he spent nearly three hungry days waiting for access to his cash once again. None of these people had left a contact number so that their banks could call and verify their card use and in both cases they were travelling reliant on just one card.

Now despite the fact that these people had done nothing wrong their banks informed them that unusual activity on their cards had been detected so hence the block. Most often it is not a human who places this block - it will be a computer programmed to detect such activity and go into anti-fraud mode. But once again, it is not only embarrassing to the individual but inconvenient in the extreme.

How can you prevent this happening to you…?

Well, basically you cannot, but you can take easy steps to ensure that you have an alternative. There is so much credit card fraud these days that the banks have highly sensitive security settings implemented and all you have to do is use your card several times a day abroad - sometimes even at home - and the alarm bells will ring at database HQ.

Those folk would not have suffered the degree of inconvenience if they had not relied exclusively on one card. I think it is crazy to travel abroad and only have one road to your cash. The best way around this is to have at least two cards and each card should be from a different bank. When we travel we have about four cards each from different banks so that if one card gets blocked (yes, it has happened to us as well) we still have another one to fall back on whilst the bank is sorting the problem out. 

You don’t have to maintain large amounts of money in all the accounts, just enough to get you by should you have any problems. It makes sense. So here’s a quick list of things to do to avoid problems…

* Inform your bank/s before you leave and go away on your trip that you will be using the card for expenditures. This gives you a certain degree of security but not 100% - remember computers set the block in place in most cases.

* Ensure you have at least two cards; one for intended use and the other/s as a backup in an emergency.

* Help your bank to help you; make sure they have your mobile phone number so that they can call you. In most cases the bank will attempt to call you prior to placing a block on your card.

* Handy Tip - get both a Visa and a MasterCard, but from seperate banks. There are many countries in the world who do not take Visa and vice versa re MasterCard.

* Final handy tip - going to Cuba/Vietnam? make sure your card is not issued by an American bank such as MBNA as it will not be accepted, nor will American Express travellers cheques.

Have a great time on holiday and don’t forget to be a good scout - be prepared!

Popularity: 7% [?]