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3 financial tips for the June travel season

3 financial tips for the June travel season
PHOTO: Unsplash

You've already booked your air tickets and lodging, and have scoped out all the must see places. Although you've already dealt with the biggest decisions planning your trip, there are still a few important financial decisions that you can make before and while you are overseas.

Here are some last minute financial tips before you head out to Changi for your vacation.

Why you should use credit cards over cash overseas

You may have heard this advice already a number of times: use your credit card while you are overseas. But have you actually considered mathematically if using a credit card really wins over using cash?

According to our analysis, using a credit card is about 10 per cent to 20 per cent more valuable than using cash overseas. This is because some of the best credit cards yield five per cent or more in cash back or miles for every dollar you spend, which can more than offset the exchange rate and transaction fees that banks charge for your card transactions.

On the other hand, actually exchanging cash with at a physical location can cost you anywhere between 8 per cent to 20 per cent in exchange rate, since these exchangers have to make a margin on this transaction. Therefore, even if a card transaction involves exchange fees or foreign transaction fees, it still comes out ahead in terms of "net cost" compared to using cash.

Alternatively, you can consider travel cards like Revolut which also give you cashback rewards while simultaneously offering more competitive foreign exchange rates as compared to the standard credit card.

The only downside to Revolut is that its cashback rewards are only available to those who are on their paid subscription. But if you are a frequent traveller, the forex savings coupled with the cashback rewards will once again easily outweigh any fees incurred.

What kind of benefits to look for in travel insurance

Travel insurance is one of the most popular financial products in Singapore. However, you shouldn't always buy the cheapest product just to get "piece of mind."

Sure, some cheapest products provide basic benefits for medical coverage and trip cancellations, and they may be sufficient for most people. But, even those people could get better benefits by shopping around for promotional activities by different insurers.

Not only that, if you are planning to engage in any sports activities like scuba diving in SE Asia or skiing in Australia, you should make sure that your travel insurance policy covers these activities. Injures obtained while doing adventurous sports are not always covered by the cheapest travel insurance plans.

Remember to use your miles to book your next trip early

If you forgot to use your miles to book your trip this time around, you should definitely remember to do so as soon as possible (ideally on your next trip!). In some countries, 23 per cent of people do not claim their credit card rewards at all , and this kind of mistake is easy to commit but can be quite costly.

One mile is worth at least S$0.01, and you are literally throwing away your money the longer you wait to redeem these miles.

History has shown us that airlines tend to devalue their miles over time, and the additional impact of inflation renders your miles worth less each year even without you doing anything. Therefore, if you've built up a balance of miles especially after your upcoming in June, it's time to start planning early for your next trip in December.

ALSO READ: How to pick the best travel insurance plan

This article was first published in ValueChampion.

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