Ringing in the New Year Part 3: Exposing Hidden Travel Costs

Happy New Year and welcome to 2020!

So, you have decided to take a trip. You have chosen your destination and set a budget. You diligently saved and now, you are ready to go! Wait a minute…it costs how much to check a bag? Using my phone abroad will be how much extra per day? And what in the world is a tourist tax?! These are just a few of the questions you may find yourself asking when traveling. I am going to explore these issues and touch on ways you can prepare for them, as well as ways to save while you travel.

In May of 2019, Ben and I left for our honeymoon to Italy. We did not want to worry about the airline losing our luggage so we knew from the get-go that we were only packing carry-on bags and our personal items, which saved us each $60/bag on both legs of our trip. While preparing to go abroad, we also knew that we both wanted the ability to use our cellphones – in case one got damaged or lost, or we became separated. We have been faithful Verizon customers for over a decade, and typically pay for the unlimited data plan. We were in Italy for 8 days, and it cost us each $10/day to have the same phone service that we enjoy in the states ($160 for the trip). That may seem like a steep price, but well worth it in my opinion…the ability to use Google maps, research restaurants, and check our flights was priceless. However, this extra cost was not something that we originally factored into our planning and budgeting, but is now something that we ALWAYS plan for. When we booked our honeymoon we used a travel service, which included taxes, so when we checked out of our first hotel in Italy we were very surprised to be charged 26€ for their “tourist tax”. Many countries around the world have a tourist tax including: Japan, New Zealand, Greece, Spain, Bali, and countless others. Do a little research prior to traveling to your destination so that you are not caught off guard by a random tax while checking out of your hotel, departing the country, or at another random time during your trip.

There are several other charges that might unexpectedly pop-up while traveling including foreign transaction fees (FX fees) that vary from 1-3% of your purchase when using your credit card. Check with your credit card company to see if this applies to you. Parking your rental car can also add up. In the United States, many destinations have some sort of free parking available. Do not expect to find such a luxury throughout Europe where parking fees can be upwards of 20€ per night! Do not forget to account for the exchange rate either, 20€ is about $22.18. As you can see…just the ability to use your cellphone, credit card, and park your car can add up to hundreds of extra unexpected dollars spent. Oh, and you will likely pick up some souvenirs along the way! Keep these things in mind when you set your original budget, as you will definitely incur surprise costs.

Do not fret! There are plenty of ways to avoid and/or decrease the aforementioned expenses. In some instances, booking an airbnb instead of a hotel can save you the shock of the “tourist tax”. But be aware that airbnb does charge exchange rate fees that are built into your booking price. Depending on the cost of your airbnb, this might be more or less than a tourist tax at a hotel. Check out airbnb’s help center page to get more details about potential hidden fees. Comparing these fees and tourist tax rates can help you make financially savvy choices when booking your lodging. To avoid hidden fees with credit cards, cash is king. However, and once again, be aware of the exchange rates and commissions (especially in airports and hotels). For example: exchanging one large lump sum of $1000 in Fiumicino will give you about 690€ – not only is the USD worth less than the euro, but exchange bureaus in busy public places can charge 10-25% in commission fees! Yikes! Notify your bank when you will be traveling abroad, let them know if you plan on using your credit or debit card, and determine your daily withdrawal limit. Instead of exchanging one large lump sum on arrival, exchange or withdraw your daily bank approved limit (at an approved ATM) as needed. Your bank might charge a small fee for using a foreign ATM – find out before you go! Also, spend all the money you have converted to the local currency -this is easier when you only exchange small amounts at a time. If you have the money exchanged back to your home currency, you will be paying conversion fees twice, and losing more money than necessary. Check with your cellphone provider to see if they offer different international plans, and choose the one that you are most comfortable with. Some providers offer pay-as-you-go, daily, and monthly international rates. If you are planning on using GPS on your phone, I would recommend a daily rate plan. Utilizing public transportation such as trains or buses can eliminate parking fees, as can walking. If you plan on covering a lot of ground during your trip, and you must rent a car, try to look for lodging that has cheap or free parking available. You will also have to put gas in your rental car. Gas advertised as 1.57€ might seem like a steal…but remember, if you are in most European countries that price is euro per liter, or approximately equivalent to $5.97/gallon in the US.

Being aware of these hidden travel costs can save you a lot of grief and anxiety when the bills come in. As always, plan and research your destination so foreign taxes and fees do not take you by surprise, or make you go over-budget. Factoring an extra couple hundred dollars into your budget for unexpected expenses and souvenirs is always a smart planning decision. Also, traveling to places where your home currency is worth more than the native currency can help you save money and stretch your budget a bit further. Pack light, and efficiently, to save on baggage fees. Walk, bike, or take public transportation to avoid astronomical parking fees and gas prices. Lastly, check with your bank, credit card company, and phone carrier to determine what services are available to you at your destination, and at what cost. This meticulous planning might seem overwhelming, but you will be grateful that you prepared for all the little details.

Thank you for joining Rebecca and I as our blogging journey is just beginning…we wish you a safe, happy, and healthy New Year – may your travels be far, and your smiles plentiful!