The traveller's check: bargains can mean bills

Our Personal Finance Editor Melanie Bien explains the many pitfalls of shopping overseas

The strength of the pound and cheap package deals mean there are plenty of bargains to be had if you shop abroad for Christmas presents. But if you don't plan carefully how you are going to pay for your purchases, you could get a nasty surprise when the credit card statement plops on the doormat.

The strength of the pound and cheap package deals mean there are plenty of bargains to be had if you shop abroad for Christmas presents. But if you don't plan carefully how you are going to pay for your purchases, you could get a nasty surprise when the credit card statement plops on the doormat.

Avoid hidden costs and charges by planning ahead. Ideally, you should take a small amount of foreign currency, traveller's cheques and a credit or debit card with you. Avoid carrying wads of cash because if it's stolen, your travel insurance will let you claim only up to about £400. Check your policy.

Traveller's cheques used to be the most common way to take money abroad because they can be replaced with a single phone call within 24 hours of being lost or stolen. But plastic is becoming more popular as it requires no forward planning and avoids the need to hunt for ATMs (unless you are withdrawing cash) or to carry lots of cash. In some instances it is essential: if you want a hire car in the US, for example, you must have a credit card.

But charges for using credit cards abroad can be high, and they are not accepted everywhere. Before you go, check with your issuer how much it charges for overseas use. Many issuers add a foreign loading fee, which averages 2.75 per cent of the transaction. So if you spend £1,000 on your credit card, you will be charged £27.50. Cash withdrawals from ATMs carry a further handling fee of around 2 per cent. So withdrawing £1,000 in cash via your credit card could set you back 4.75 per cent, or £47.50.

One solution is to keep a separate credit card for holidays. Nationwide and Lombard Direct make no extra charge for foreign use, while Liverpool Victoria, Frizzell and Saga don't charge a loading fee in Europe (1 per cent elsewhere).

The other problem is card fraud. Inform your card issuer of your trip, otherwise your card may be blocked because your spending deviates from the norm. While you're on the phone, check your credit limit is high enough: there's nothing worse than going all that way to find bargains only to have your card rejected.

When shopping, never let your card out of sight because a dishonest sales assistant could try to skim the details (if the card has a magnetic stripe) by swiping it through a small card reader under the counter. These details are then used to make counterfeit cards, which are sold on. Keep all receipts and check them against your statement when you get home. If there are discrepancies, contact your card issuer immediately.

Report lost or stolen cards to the issuer immediately: jot down the contact details of card issuers before you go and keep them separate from your plastic.

If you have a chip and personal identification number (PIN) card with an international logo, it will be accepted by overseas retailers and cash machines. If the country you are visiting has upgraded to chip and PIN you will be asked to enter your PIN in the same way as in the UK. If it hasn't upgraded, you will have to sign when making a transaction and may be asked to show your passport. In France you will have to provide your signature - even though they have been using PINs for some time, because their system is not compatible with the UK's.

Outside the EU, remember that you must pay duty and VAT if you spend more than £145 on goods other than alcohol, cigarettes and perfume, when you come back to the UK. A trip to the US to pick up cheap electrical goods, CDs for a fiver and half-price Levi's, could find you falling foul of the same rules that caught out Coleen McLoughlin, the fiancée of the footballer Wayne Rooney. The import duty depends on the item - 8 per cent on a leather handbag, 14.7 per cent on a non-leather one, for example. VAT at 17.5 per cent is then added to the total.

To avoid a fine at the airport and being held by Customs and Excise, go through the red channel, or use the red point phone. Keep receipts, particularly if you picked up a bargain, or Customs & Excise will use a realistic price when calculating the duty you owe, which may be far higher than the one you paid.

The Independent travel offers: Discover a world of inspiring destinations

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Life and Style
tech
Travel
ebookHow to enjoy the perfect short break in 20 great cities
News
The Commonwealth flag flies outside Westminster Abbey in central London
news
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
theatre
Extras
indybest
News
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
Independent Travel Videos
Independent Travel Videos
Simon Calder in Amsterdam
Independent Travel Videos
Simon Calder in Giverny
Independent Travel Videos
Simon Calder in St John's
Independent Travel Videos
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Travel

    VB.NET and C# developer (VB.NET,C#,ASP.NET)

    £30000 - £45000 per annum + Bonus+Benefits+Package: Harrington Starr: VB.NET a...

    Visitor Experience volunteer

    Unpaid voluntary role: Old Royal Naval College: To assist the Visitor Experien...

    Telesales Manager. Paddington, London

    £45-£55k OTE £75k : Charter Selection: Major London International Fashion and ...

    Recruitment Consultant (Trainee), Finchley Central, London

    £17K OTE £30K: Charter Selection: Highly successful and innovative specialist...

    Day In a Page

    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
    Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

    Meet the people who play with Lego for a living

    They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
    The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

    20 best days out for the summer holidays

    From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
    Open-air theatres: If all the world is a stage, then everyone gets in on the act

    All the wood’s a stage

    Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
    Rand Paul is a Republican with an eye on the world

    Rupert Cornwell: A Republican with an eye on the world

    Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
    Self-preservation society: Pickles are moving from the side of your plate to become the star dish

    Self-preservation society

    Pickles are moving from the side of your plate to become the star dish
    Generation gap opens a career sinkhole

    Britons live ever longer, but still society persists in glorifying youth

    We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor