From having your wallet stolen to getting into an accident with your rental car, there are many things that can go wrong financially on vacation. However, that does not mean that the only way to protect your wallet and see the world is sit at home and watch the Travel Channel. By keeping in mind a few basic guidelines, you can have a financially-safe vacation.

Debit and Credit Cards

When booking your hotel, airline, and car rental reservations and making purchases during the trip, it is usually safer to use your credit card than debit card. If your credit card is lost or stolen and unauthorized charges are made, your maximum liability is $50. Additionally, if you use your credit card to pay for a good or service that is never received (e.g., the hotel or airline goes out of business before your trip), you can ask the credit card company for a reversal of the charge. With a debit card, your liability is $50 only if you report it within two business days. Many financial institutions provide stronger protections for debit cards than what is required by law, but you still have to wait until they complete their investigation before the money is restored to your account (whereas with a credit card, you can hold payment on disputed charges).

While credit cards have many benefits, you may go to some places that only accept cash. Unless you are at a locale with no ATMs, try not to carry more than $100 – a large wad of bills can attract thieves, and cash cannot be replaced if lost or stolen. Be careful when using the ATM, especially in a foreign country. Scammers sometimes set up phony ATMs in tourist destinations to steal account information. Your safest bet is to use an ATM in a hotel, airport, or bank. Another option is to get traveler’s checks, which can be replaced if they are lost or stolen, but they may not be accepted everywhere.

It is a good idea to make a list of the account and customer services numbers of the credit and debit cards you plan on taking with you. Keep it in a safe place in your hotel room, and give a copy to a trusted friend or family member. That way, if your cards are lost or stolen, you will be able to contact your financial institutions quickly. If you are traveling abroad, you may also want to notify them of that ahead of time. Atypical activity can cause a red flag with identity theft detection software and result in your account being frozen – obviously a huge inconvenience if your card was not actually stolen. Consider keeping one of your cards in your hotel room (in a safe – don’t leave it out) so that if your wallet is stolen, you are not stranded financially.

Travel and Car Rental Insurance

Rental car insurance covers damages and loss of use if you get into an accident with your rental car. Before you are at the rental counter deciding whether or not to get this, research what coverage you already have. Comprehensive personal auto insurance policies often cover rental cars, making rental car insurance unnecessary. (However, this is typically not the case for liability-only policies.) Also, if you use your credit card to pay for the rental, the credit card company may provide collision insurance for free. If you do not have rental car coverage under your personal auto policy or credit card, buying it from the rental car company is usually a good idea since repairs can costs thousands of dollars.

Travel insurance typically provides coverage for trip cancellation/interruption, lost or damaged baggage, and emergency medical expenses. Like with rental car insurance, it is a good idea to first identify what coverage you already have. For example, homeowners insurance often covers property stolen on vacation. On the other side, many health insurance plans do not pay for medical expenses incurred overseas or emergency air evacuation. Also consider what the cancellation policy is for the things you are booking in advance. Most U.S. hotels will allow you to cancel without penalty up until the day before the reservation, and the fee to change a flight is often small. In contrast, cruise ships tend to charge a large cancellation penalty or not provide a refund at all if you cancel within a few weeks of the trip. Overseas tours also often charge hefty cancellation fees. As a general rule of thumb, getting travel insurance can be a wise financial move for foreign travel and cruises but is usually not worth the cost for domestic trips.

Bon voyage!

1. Use public transportation. Tourists often take a taxi because it is easier, but the subway or bus is almost always cheaper. If you get lost, just think of it as an adventure!

2. Carry a second, “fake” wallet with a few dollars in it on you. If you get mugged, you can hand that over to the thief instead of your real wallet.

3. Go during the off-season. You may be able to save a bundle if you, for example, go to a ski resort during the summer. (Of course, you may not be able to go skiing, but many resorts offer other activities.)

4. If you need to buy water, snacks, medicine, etc., try finding a grocery store instead of using the hotel gift shop. Hotels often overcharge.

5. If you want to travel to a foreign country, consider the exchange rate. Obviously your money will go further in a place where the value of the US dollar is strong.

6. Consider taking the train or bus instead of flying – it is usually cheaper. You may not want to do this for a vacation on the other side of the country, but if you are traveling not too far from home, you may actually save time when you consider the need to get to the airport early and wait in baggage claim.

7. If you are going to fly, see if you can use secondary, regional airports, instead of the main ones. The flights are often cheaper, and there are usually less delays too.

8. Create a vacation savings account. If you set aside a little bit each month, you won’t have a problem paying your credit card bills the month after your trip.

9. Know your account fees. You may be charged a foreign transaction fee if you use your credit or debit card in another country. You may also be charged an ATM fee if you use another financial institution’s ATM. Stick to the cards with the lowest fees.

10. Before the trip, think about what attractions you may want to visit and look for coupons online.

Tough Times, Great Travels: The Travel Detective's Guide to Hidden Deals, Unadvertised Bargains, and Great Experiences
By Peter Greenberg (Rodale Books 2009)

In this economy, most people don’t have thousands of dollars to spend on vacation. Tough Times, Great Travels offers a multitude of tips on how you can travel without breaking the bank. Topics discussed include the best time to make airline and hotel reservations (12:01 AM Wednesday and 4:00 PM Sunday local time, respectively), cheap alternatives to staying in a hotel, which cities have discount cards and whether they are worth the price, how solo travelers can avoid or minimize the single penalty charged frequently by hotels and cruises, and websites where you can go to find deals. This $9.95 book could save you hundreds of dollars on future vacations.

Copyright © 2010 CCCS
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