How to spend wisely on the road
Summer vacations aren't cheap, and they often pile on additional expenses when travelers let down their guard or make uninformed spending decisions. And nowadays, travelers face an increasing risk of having financial and personal information intercepted. Stealing both your money — and your summer fun.
Here are some of the most important considerations and tactics for spending wisely on the road and keeping the unspent money safe at home.
Protect your plastic
While they all may look similar, those money-related cards in your wallet are not created equal. Using them without paying attention can cost you — anywhere from bank fees to scams that can grab your card information and grab everything you've got in the linked bank accounts.
Online hackers, who have been swiping credit card numbers for years, have been able to move onto new hunting grounds as security evolves. When merchants started cracking down on data fraud at the checkout counters of retail stores, criminals moved on to non-human cashiers in places of particular interest to travelers, like fuel pumps and ATMs.
Thieves get your information in various ways. Some use hidden cameras that can detect your PIN or deliver screen messages that your money can't be dispensed, grabbing your data in the first case and the cash you requested, too, in the second. Others actually install a so-called skimmer, which reads data off the magnetic strip when you slide your card through the machine.
Skimming is especially rampant at ATM and payment kiosks located outdoors and in areas with light foot traffic. Debit-card compromises at ATMs on bank property rose 174 percent from Jan. 1 to April 9 in 2015, compared with the similar period a year earlier; at non-bank machines, the increase was a whopping 317 percent, according to FICO, the credit-rating company that is also in the ATM security monitoring business. A third of all credit card holders reported that they have been affected by a data breach or credit card fraud. It doesn't just happen to other people, and it's a real disaster if it happens while you're on vacation.
Another popular hunting ground for credit card rip-offs is hotels, particularly their restaurants and retail spaces such as gift shops. They are attractive targets because security procedures are not always uniform; there may be easy access to card readers; and the cardholders make for perfect victims, often well-off executives who may be on the road a long time and unlikely to scan their credit card bills before they return home.
Pay attention to possible signs of trouble. Skimming machines are about the size of playing cards and are installed in a hurry. If the ATM looks banged up, if the keypad feels too stiff or rattles when you start a transaction, if the card doesn't insert properly, get your money elsewhere.
Whatever cash machine you use, cover the keypad when you type in your PIN. Thieves need the card number and the PIN number for the scheme to work.
Also make sure to update contact information with your banks/credit card companies. They're good about detecting suspicious activity and letting you know about it; but only if they can get in touch with you.
New credit cards come with EMV chips, the latest effort to thwart the hackers. Unfortunately, they also come with the magnetic strips, making them readable to both old-generation card readers and old-school card thieves.
Paper or plastic?
Debit or credit — there are advantages and disadvantages to each. But the bottom lines are easy:
— Credit cards are equipped with better security and minimize your losses in case of a breach. Your liability is limited to a maximum of $50, no matter how much is charged to your stolen card.
— Debit cards also limit your losses — a number that goes from $50 to $100, depending on how long it takes you to notify the card company of a problem. But the main risk is that with a debit card thieves have access to your actual funds and could commence to empty your bank accounts. .Your bank won't give you replacement money.
So the rule of thumb is always use the credit cards, except ...
— When you absolutely need cash: Use a credit card in an ATM, and the bank will charge you for a cash advance — a fee that has inched up to an average of 4 percent or $14 per visit to the ATM. A debit card has no fee for getting money.
— Speaking of fees, if you're traveling — especially abroad — financial institutions like to make a little extra on these more intricate (i.e., currency switching) transactions. So they invoke foreign transaction fees — 2 percent or 3 percent is standard, and if you spend $4,500 on the road, that's a lot in fees. The good news is many major U.S. credit card issuers waive the fee on certain cards. They're usually the ones aimed at travelers: Chase Sapphire Preferred; Capital One Venture Rewards Credit Card; BankAmericard Travel Rewards Credit Card; Capital One Quicksilver Cash Rewards Credit Card. In fact, Capital One and Discover don't charge foreign transaction fees on any of their cards.
Stop paying twice
Your credit cards have their perks, and one real saver is rental-car insurance coverage. All four of the big card issues offer some such coverage. MasterCard is the only network that does not provide coverage on all its cards. American Express and Visa have the best rental-car insurance policy, followed closely by Discover. Still, roughly 20 percent of consumers purchase supplemental insurance coverage when renting a car, according to a study from Progressive Insurance; another 20 percent do so occasionally. The primary motivation for such purchases is confusion as to whether one's personal auto insurance extends to rental cars.
There are requirements for your card's coverage to kick in: You need to charge the entire rental car purchase on the credit card and decline supplemental insurance/collision damage waivers offered by the rental company. Some cards don't cover SUV rentals, and a few don't cover rentals in some countries. CardHub has a great collection of comparison charts about rental-car coverage at cardhub.com.
Apps have your back
Even after you've bought and paid for your vacation, you may get a welcome surprise if you use these travel apps from a list compiled by the very resourceful, determined and passionate traveler (and New York City tour guide) Jessica Festa, on her site, jessieonajourney.com.
— Tingo is one of a handful of online tools that rebook a confirmed, non-refundable hotel reservation for you as prices drop. You can only choose from the hotels it's selling on its site, but apparently that is a "more than decent selection," Festa said. It also alerts you if a higher room category becomes available for the same rate or less than your original room.
— DreamCheaper, a recent start-up, also rebooks your room when prices drop, and you don't have to make your original reservation with it. Book your room on any website and then forward your booking confirmation to firstname.lastname@example.org and DreamCheaper will be on the case. The company says it can save travelers up to 60 percent off the original price.
— HotelTonight is what many savvy travelers swear by for last-minute hotel deals. Like crazy-good deals. The closer to the stay date the better deals you'll find. Like $100 off, and it's totally user friendly.
— Yapta does rebookings like those mentioned above and will also track your flights for lower fares. Of course, the quest for a refund windfall ends when you board the plane or check into your room.
That's when you should turn your attention to one final travel windfall:
— The VAT refund. Many countries that roll their value-added tax into the prices of goods and services are ready and willing to refund those taxes to visitors. At anywhere from 8 percent to 13 percent or more of the total purchase, that adds up to a nice — and probably much welcome — surprise after spending for a summer vacation. Remember, keep all your receipts and present them to officials at the airport before departure.
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