Gappers: get covered and stay protected
Funding Your Gap Year
Although many people planning a gap year will be funding their travels through savings or money earned while abroad; a number will be looking at other alternative ways to pay for their trip. Using a credit card designed for overseas usage which also offers zero per cent on purchases can help spread the cost of travelling.
For example, the Nationwide Building Society Select Card offers 0% on purchases for 12 months. It also offers no commission charges when making purchases abroad – however, you need to be a Nationwide FlexAccount customer to open the card.
Alternatively, borrowing on a personal loan may be an option for some travellers. Borrowing £5,000 over 5 years with the marketing leading Derbyshire Building Society Personal Loan at 7.6% would cost £99.83 per month, with a total cost over the term of £5,990.
Bob Atkinson, travel expert at MoneySupermarket.com said: “Anyone looking to borrow money to fund their gap year should think carefully before they sign up to any deals to make sure they can afford to make the required monthly repayments. Using a zero per cent credit card which is also designed for overseas usage is a good way of spreading the cost of the trip.
“However, make sure you set up a direct debit to meet the minimum monthly repayments and have the required funds in your bank account. Alternatively if you want to spread the cost of the trip over a longer period, a personal loan could be a good option, but again you need to make sure you have the funds available to meet repayments.”
Plan ahead- cash and prepaid cards abroad
Waiting until the bureau de change at the airport could mean you pay a significant amount more for your currency. Order cash online before you go for delivery or collection, and if you need to exchange currency while away, ensure you shop around to find the best deal.
Pre-paid cards can be great alternative to cash. Many offer competitive exchange rates on foreign currency and some come without the sting of withdrawal and purchase fees. The lack of credit facility on these products means you can’t spend more money than you have, helping you budget when overseas.
For example, CaxtonFX Global Traveller currency card has no charges for ATM or purchases abroad. Make sure you use a card which is designed for the currency you are using, otherwise you could end up paying additional fees. Pre-paid cards can also be quickly loaded online so if you run out of cash while away, or need emergency funds, they are a useful tool.
Check your plastic is overseas friendly
If you’re planning to use a credit or debit card while abroad, make sure you use one which is specifically designed for overseas usage. The Norwich & Peterborough Building Society Gold Current Account for example, offers no withdrawal charges, retail transaction charges or handling fees when using abroad. Using a credit card for ATM transactions abroad can be expensive as interest is charged daily. Only the Sainsbury’s Gold Credit Card charges no interest on ATM withdrawals if the balance is paid in full at the end of the month. However, the card does come with a £5 monthly fee and the ‘free’ travel insurance is unsuitable for anyone on a gap year trip.
Protection when abroad
Gap year travel insurance
Heading abroad is an exciting time for many travellers, and thinking about things that could potentially go wrong will rarely be front of mind when planning adventures. It is crucial, however, to have adequate insurance in place, and many insurers cater for the adventurous traveller with policies designed specifically for a gap year. Some providers will offer cover for sports activities within gap year policies, although these activities and levels of cover vary depending on the provider, so it is important to read the policy wording carefully for caveats and small print.
The cost of comprehensive insurance cover for the entire duration of your trip doesn’t need to break the bank and will not only put your mind at rest, but offers peace of mind to friends and family as well. For example, twelve months worldwide cover from Insure & Go’s Backpacker Light policy costs £163.71 and provides cover for up to three bungee jumps and offers additional cancellation cover and also meets MoneySupermarket’s recommended minimum level of cover.
Instant overseas transfers
Many providers offer international transfer services which can be great peace of mind for parents who need to top up their children’s funds when caught short abroad. It pays to shop around, and many providers such as HiFX offer competitive money transfer deals. Look out for fees including transfer charges and overseas bank receiving fees. Many companies may also load an exchange rate despite claiming to be ‘commission free’ so ensure you’re aware of all the possible charges involved before you transfer.
Bob Atkinson, travel expert at MoneySupermarket.com said: “For anyone taking time out to travel and explore the wider world or opting for a longer, more intrepid getaway, it’s vital that you consider every aspect of the gap year before you go.
“Budget for all you may need to spend before you go- this will need to cover your travel and taxes as well as transfers, accommodation costs and food. Keep track on your overdraft, especially if you plan to use this as a back-up – be aware of any charges and stay within your authorised limit. There are many banking apps which can help you keep tabs on spending, or register for online banking while you’re away.
“Planning is vital when it comes to gap year finances and having the right products in your backpack will keep you covered, calm and in control. There’s nothing worse than getting stranded with no money or returning to find a hefty bill on your doormat simply by not planning ahead.”