Pack more than your bags for a gap year

Students with wanderlust need to sort out the financial nitty-gritty before heading off, writes Chiara Cavaglieri

Thousands of school leavers will be about to embark on the what's becoming an almost mandatory gap-year experience. It is estimated that young travellers will have to fork out between £3,000 and £4,000 to cover the average cost of a gap year, but careful preparation is the key to curbing expenditure.

One of the most important financial purchases will be travel insurance, to protect against the costs of falling ill in a foreign country and losing possessions. "The biggest concern is that 25 per cent of those who travel are either uninsured or underinsured," says Tom Griffiths, the founder of

Insurance for gap-year travel is offered as a separate policy and will often be referred to as backpacker cover. Although annual travel policies are designed to provide a year's worth of travel cover, there is a limit (usually 30 days) on how long each trip can last. A specialised backpacker policy, on the other hand, will cover the holder for a set period of continuous travel, whether three, six, 12 or 18 months.

Most policies are sold with some kind of geographical limit, so the first step will be to check that the policy includes every country being visited. Comparison websites are useful for checking the cost of these extended policies, but it is important to look at how extensive the cover is before buying.

When it comes to the amount needed to cover potential costs,, the financial comparison site, recommends travellers take out a policy that would pay out £2m for medical expenses, £1m for personal liability, £3,000 for cancellation and £1,500 for baggage costs. There are policies advertising unlimited medical cover but this is largely a waste of time and not worth the extra cost. "Unlimited cover as far as I'm concerned is a marketing gimmick. Expenses don't top the £2m mark, even in the United States," says Mr Griffiths.

Also, a gap year may feature extreme activities, such as bungee jumping and white-water rafting, so it is important that anyone with an adventurous tendency picks a comprehensive policy that covers them for dangerous pursuits. Most gap-year policies will cover certain extreme sports as standard but always check the terms and conditions as there are often stipulations which may void the policy if not met.

How to access money for both emergencies and general spending is another crucial question. "The Nationwide FlexAccount has long been the current account of choice for students taking a gap year," says Pete Harrison, credit card expert at "It is the only provider that doesn't make foreign currency charges on purchases and cash transactions anywhere in Europe."

Even outside Europe, the FlexAccount comes out on top and charges just 0.84 per cent per transaction, although this rises to 1 per cent in July. In comparison, the NatWest current account plus charges a 2 per cent ATM fee, plus a 2.75 per cent transaction fee. Making 10 withdrawals of €£50 from the NatWest account would therefore cost an extra £18.75 in fees.

Travellers must always inform their bank about any travel plans. Banks may freeze accounts that have any unusual activity so using an account abroad may spark some concern if they aren't aware of your plans.

It is also important to keep a note of the bank's emergency telephone number in case your credit or debit card is lost or stolen, and ensure that the bank can provide a replacement card to the countries being visited, preferably within 24 hours.

Gap-year travellers needing to use a credit card abroad should look for one of the few cards that will not levy foreign exchange fees, such as the Abbey Zero, Post Office credit card and Nationwide Gold (Europe only).

Most students will have a fairly limited credit history so young travellers may find they cannot get hold of the advertised typical annual percentage rate, or they may even be rejected for a card outright. If this happens to you, find out if you can be added as an authorised user on a parent's credit card. Alternatively, gap-year travellers can get themselves a prepaid card, which does not require a credit history and can also be a useful way for parents to help their children financially during their travels.

These cards can be loaded up in the currency of choice before leaving but, more importantly, many can also be topped up online as and when more money is needed during the course of the gap year. As there is no credit facility, only the amount that has been loaded on to it can be spent, which may come as some relief to parents worried about credit-card fraud.

Prepaid cards are also a simple way to control spending and help travellers to budget for the duration of the trip.

With prepaid cards, shopping around is essential. There are cards that charge extortionate fees for loading, so avoid any asking for a monthly holding fee or application fee. The FairFX prepaid card is one of the best for overseas purchases in Europe and the United States. It costs £9.95 initially but there are no transaction charges or loading fees, and money can be topped up quickly and easily by debit card or a bank transfer. It does charge £1 for ATM cash withdrawals but this is still less than most debit or credit cards.

Keeping in touch with family and friends back home will be a significant financial issue, particularly for long trips. There are several options open to gap-year travellers wanting to use their mobiles abroad without paying through the nose. Most of the networks offer some kind of incentive for international phone calls so this is a good place to start.

Anyone travelling this summer, for example, can take advantage of Vodafone's summer promotion which offers members of its passport scheme the chance to use their mobiles abroad and pay only what they would normally pay in the UK. This means that members can use their inclusive minutes when travelling in most European countries as well as Australia and New Zealand.

If a large chunk of the gap year is being spent in one country, a local SIM card is usually the cheapest way to make and receive phone calls. For those travelling to several countries, an international SIM card may be a better option. With these SIM cards, it is typically free to receive calls and texts in most countries and call rates are usually a fraction of the cost when compared with the charges set by network providers. T-Mobile customers, for example, would pay 70p per minute to receive and make a call in Australia and 40p per text to the UK, while those with an international SIM card from SIM4travel would pay just 49p per minute to make a call and nothing to receive a call. Another option is to get a mobile phone which can make Skype calls, which are less expensive than standard mobile calls.

The essentials: A passport is not all you need

Be covered

Do not let your children leave the country without travel insurance. Keep copies of how to claim on their travel insurance.

Consider prepaid cards

Prepaid cards are not linked to you or your child's identity or bank account. They have full MasterCard or Visa functionality and can be topped up.

Cheaper communication

Expensive overseas calls are a thing of the past. Consider Voice Over Internet Protocol (VOIP) options such as Skype for free calls. Or set up a cheap call account on your phone at home.

Reclaim income tax

People who are employed for part of the year and earn lower than the income tax personal allowance can reclaim any tax they have paid through the PAYE system. Check out

Legal power

Power of attorney over your children's finances means you can sort out any problems from home if they lose their cards overseas or become victims of fraud.

Source: Gap

Compare with the Independent: See how much you could save by switching credit cards. Compare now

Arts & Entertainment
tvGrace Dent on TV
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Life & Style
The exterior of a central London Angus Steakhouse
food + drink
Mercedes driver Lewis Hamilton of Britain drives in the rain during the qualifying session of the Chinese Formula One Grand Prix in Shanghai
indybestFake it with 10 best self-tanners
Arts & Entertainment
Madonna in her music video for 'Like A Virgin'
music... and other misheard song lyrics
Much of the colleges’ land is off-limits to locals in Cambridge, with tight security
educationAnd has the Cambridge I knew turned its back on me?
Steven Gerrard had to be talked into adopting a deeper role by his manager, Brendan Rodgers
sportThe city’s fight for justice after Hillsborough is embodied in Steven Gerrard, who's poised to lead his club to a remarkable triumph
peopleOrlando Bloom the pin-up hero is making a fresh start
Who makes you happy?
happy listSend your nominations now for the Independent on Sunday Happy List
Arts & Entertainment
filmLife for Leslie Mann's can be challenging sometimes
For music lovers: John Cusack with his vinyl collection in 'High Fidelity'
voices...but don't forget rest of the year
The energy drink MosKa was banned for containing a heavy dose of the popular erectile dysfunction Levitra
People are buying increasing numbers of plants such as lavender to aid the insects
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition iPad app?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    1st Line Helpdesk Engineer Apprentice

    £150.00 per week: QA Apprenticeships: This company has been providing on site ...

    Telesales & Sales Support Apprentice

    £221.25 per week: QA Apprenticeships: This company is a well established Inter...

    Client Relationship Manager - SQL, Python

    £40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

    **Financial Services Tax**

    £35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

    Day In a Page

    How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

    How I brokered a peace deal with Robert Mugabe

    Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
    Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

    British Muslims's Happy video attacked as 'sinful'

    The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
    Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

    Michael Williams: Do as I do, not as I pray

    Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
    A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

    A History of the First World War in 100 moments

    A visit to the Front Line by the Prime Minister's wife
    Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

    Jenny Collier: 'Sexism on stand-up circuit should be extinct'

    The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
    Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

    Cannes Film Festival

    Ken Loach and Mike Leigh to fight it out for the Palme d'Or
    The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

    The concept album makes surprise top ten return

    Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
    Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

    Lichen is surprise new ingredient on fine-dining menus

    Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
    10 best baking books

    10 best baking books

    Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
    Jury still out on Manchester City boss Manuel Pellegrini

    Jury still out on Pellegrini

    Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
    Ben Stokes: 'Punching lockers isn't way forward'

    Ben Stokes: 'Punching lockers isn't way forward'

    The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
    Mark Johnston: First £1 million jackpot spurs him on

    Mark Johnston: First £1 million jackpot spurs him on

    The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
    Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

    Ricky Gervais: 'People are waiting for me to fail'

    As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
    Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

    Mad Men returns for a final fling

    The suits are still sharp, but Don Draper has lost his edge
    Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

    Google finds a lift into space will never get off the ground

    Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit