When you plan your holiday, make sure you have a budget. There is a likelihood that you will go over budget a bit, but make sure your budget is a reflection of what you can afford.

My suggestion is that you don’t put anything on your credit card that you can’t afford to repay before the interest will be calculated.

When booking through a travel agent there will be key dates where progress payments will need to be made.

When you are planning a holiday yourself it is a good idea to spread the cost out over a period. This is usually easy to achieve if you start planning your trip early.

Payment methods

I tend to have 2 credit cards that I use, my everyday credit card that has the lowest fees and interest rate that works for me and allows me to make any purchases in my home currency. The second credit card is my travelling credit card that has no overseas foreign currency fees. These cards aren’t usually the best for everyday purchases.

I tend to use Paypal for some of my payments so that my Credit Card details aren’t stored in too many different places and I can be more confident that my credit card details will not be compromised. You can link both your local and your travelling credit card to your Paypal account. The exchange rates at Paypal are quite competitive. It is worth checking under what conditions a Foreign currency conversion fee will be applied.

Travel cards allow you to withdraw money from ATM’s overseas so that you have cash to spend. Not all areas that you travel to are accepting of credit cards. I will be dedicating a whole post to the topic of spending money, but I wanted to mention Travel cards here because they also provide a method for spreading the cost of your holiday over time.

Spreading your costs

The following is a suggested list of what to pay for when, and what method of payment to use to help you spread the cost over time.

WhatWhenHow
Long Haul Flights9-12 Months prior to travelEveryday Credit or Debit Card
Travel InsuranceAs soon as you have booked your flightsEveryday Credit or Debit Card
AccommodationI make sure that I book my accommodation so that I don’t pay for it until I have completed my stay. This allows me to spread the cost across the duration of my holiday and gives me the freedom to change my accommodation up to 24hrs before.Travelling Credit Card
Car HireCar hire companies will have limits on how far out you can book your vehicle. While it is easy to book cars once you arrive, you want always have a great choice of vehicles. If you have more than 2 people and some large suitcases I suggest you book and pay for you car 3 – 6, months out.Travelling Credit Card
Train faresTrain fares can usually be booked 3 months before travel. Booking and paying for them early ensures you have more flexibility in departure dates and times and cheaper prices.Travelling Credit Card
ToursIf there are any day tours or activities that I would be upset if I missed out on, then I book them early as well. I always check the cancellation policy first though.

Progressively booking and prepaying for tours and entrance fees is another good way to spread the cost over times.

Paypal or Travelling Credit Card
Travel CardsPreloading travel cards with foreign currency in advance of your departure, allows you to progressively pay money and allows you to spread your exchange rate risk over time. Just check what fees your travel card charges for loading cash.Cash
CashIt is always a good idea to take cash in the currency of the country you are visiting. Many small businesses and markets won’t accept credit cards and often tipping is mandatory and also can’t be paid via credit card.
Buying foreign currency over time allows you to spread the cost over time and spread the exchange rate risk.
If you are ordering over the internet check that payment made on your card is not considered a “Cash Advance” as interest can be excessive for cash advance.
Cash or local credit card

Don’t come home to a mountain of debt!

Make sure that you don’t come home to a huge debt. If you are planning on using your overseas travel card while you are away, make sure you are paying for things that you have budgeted for or have money put aside to pay for.

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