Research launched today by Travelex reveals consumers are still relying on credit and debit cards abroad, last month Brits risked £58 million in extra charges at ATMs and in retail outlets abroad.
This is the equivalent of sending 20,000 families of four on a week-long holiday to the Med.
Last year Britons used their cards for overseas transactions totalling £25.2 billion - £18.1 billion on credit and debit card purchases and £7.1 billion on cash taken out of overseas cash machines. The Travelex research shows in the last month alone 20% of holiday makers used credit or debit cards in retailers abroad as their main source of travel money, incurring charges in the region of 2.75% totalling £43.6 million; and 26% of consumers relied on withdrawing local currency at ATMs where a overseas fee of 1.5% charge incur charges worth £14.4 million.
Martin Bamford, personal finance expert and best-selling author said: "The results shows even in tough economic times, consumers are not being smart with their money when travelling abroad. For each of these transactions consumers are risking uncompetitive and fluctuating exchange rates and overseas charges. Whilst many would see using credit and debit cards as a way to spread finances and have easy access to money, the charges they incur will actually cost them more money in the long run."
The Travelex research showed men are more likely to use cards than women with almost half (45%) of men using cards abroad compared to just over a third of women (36%). Nearly half of all 18-24 year olds (49%) will use foreign cash purchased pre-trip, whereas the least likely to use cash are the 25-34 year olds and the 55+ (39%).
The research also shows the number of people using travellers cheques as their main source of travel money has decreased by more than a half in the past month compared to the last six to 12 months (12% to 5%) although the purchasing of foreign banknotes on the UK High Street remains the most popular foreign exchange product (42%).
Stephen O'Donovan, Regional Director, Travelex said: "Pre-trip foreign exchange is almost always a better lways a better deal that arranging it when you arrrrive.
We recommend people research rates and lock-in favourable ones on products such as our commission free prepaid currency card. Despite the fact that the Euro is stronger that a year ago, two thirds of people travelling to Europe have not planned to counter the impact this will have on their holiday budget. It means that they are more likely to run out of spending money before the end of their holiday and then be forced to use more expensive channels, like overseas ATMs, to fill the shortfall. For a happy holiday and to return debt free, planning really is the key."
Kerrie Laird, who has been planning a holiday to Rimini with girlfriends in July, said: "I spent a long weekend in Rimini last year for my hen do and really wanted to go back for a slightly longer holiday. I relied mainly on using my credit and debit cards last year but came home to much larger charges than I had expected. This year I'm planning to budget my spending money with 80% on a Euro Cash Passport and 20% in notes bought from my local High Street, where I've noticed some really competitive rates. I also feel more secure knowing that if I did loose my wallet or the ATM ate my card, I wouldn't be stranded without funds as Travelex will replace my Cash Passport balance in 20 minutes."
Top five tips for being smarter with your money abroad:
- Know your budget - research the average cost per day of your holiday to set a realistic budget
France could see you become a tea-totaller with a pint costing a frightening £6. But head to Indonesia and that beer will cost you only £1.54.
In New York, a bed (3*) can cost you a whopping £325, yet in Malaysia the equivalent is a mere £50
- Get the most for your money - buy before you fly. Lock in a more favourable rate in the UK before you go and minimise overseas card charges
Most (43%) of travellers buy their foreign exchange two weeks before they depart
- Don't get caught short - You'll get less Euros this year than last but more US Dollars for your Pound so be prepared to alter your budget to reflect currency fluctuations
- Be secure - with ID theft and fraud on the rise, protect yourself with products that don't make personal details visible and avoid links to your bank account with product such as Cash Passport
Over 60% of travellers fear credit or debit card cloning while abroad
- Ensure your holiday can continue even if your wallet is lost or stolen abroad.
Foreign Banknotes are unlikely to be insured while replacement of cash or cards can take weeks and require payment of hefty international delivery fees. All products supported by Travelex come with 24/7 Global Emergency Assistance including access to emergency cash in as little as 20 minutes.
- Don't lose leftover foreign currency - Most High Street retailers will offer free buyback for leftover currency or you can keep it on a prepaid currency card for your next trip
80% of travellers return with leftover currency and 85% plan to save it for their next trip, assuming they can remember where it's stored