You’ve already booked your plane tickets, your accommodation and seen all the sights. You’ve already made the most important decisions for your trip, but there are still some important financial decisions you can make before and during your stay abroad.
Before you leave for your holiday to Changi, here are some last minute financial tips:
Why you should use credit cards instead of cash abroad
You’ve probably heard this advice many times: use your credit card abroad. But have you ever considered the maths to see if using a credit card is really better than using cash? The team at ValueChampion did just that.
Our analysis shows that using a credit card abroad is around 10-20% more valuable than using cash. That’s because some of the best credit cards offer 5% or more cash back or miles per dollar spent, which is enough to offset the exchange rate and transaction fees that banks charge for card transactions.
On the other hand, exchanging actual cash at a physical location can cost you 8%-20% of the exchange rate, as the exchange has to make a margin on this transaction. So even if your card transaction incurs currency exchange and foreign transaction fees, it’s still cheaper than using cash from a “net cost” perspective.
Alternatively, you could consider a travel card like Revolut, which offers better exchange rates than standard credit cards while also offering cashback rewards. The only downside to Revolut is that the cashback rewards are only available to paid subscription customers. However, if you travel frequently, the foreign currency savings and cashback rewards can easily outweigh the fees you incur.
What to look for in travel insurance
Travel insurance is one of the most popular financial products in Singapore. However, you don’t need to buy the cheapest product just for “piece of mind”.
Of course, some of the cheapest products offer basic benefits such as health insurance and trip cancellation, and these will be enough for most people. However, these people can also get better benefits if they look for special offers from different insurers.
Furthermore, if you are planning to do sporting activities such as diving in Southeast Asia or skiing in Australia, you should ensure that your travel insurance covers these activities. Injuries sustained while participating in adventure sports are not necessarily covered by the cheapest travel insurance.
Don’t forget to use your miles early to book your next trip
If you forgot to use your miles to book a trip this time, make sure you book as soon as possible (preferably on your next trip!). In some countries, 23% of people never use their credit card rewards, and while it’s an easy mistake to make, it can be quite costly.
With one mile worth at least S$0.01, the longer you wait to redeem your miles, the more money you’re literally wasting. As history has proven, airlines tend to devalue miles over time, and when inflation is added in, your miles will become less valuable year after year without you doing anything. So it’s time to start planning early for your next trip in December, especially if you’re saving up your mileage balance after your next trip in June.
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