Avoid these Christmas shopping blunders

Robert Powell takes a look at how to avoid a festive nightmare when buying overseas this Christmas...

Christmas shopping in London rests on a very loose definition of ‘shopping’.

I’ve braved Oxford Street a handful times over the last few festive seasons, and have spent less time shopping and more attempting to avoid being kettled by mobs of crazed John Lewis shoppers all vying for the same discounted toiletry set.

It’s less shopping, and more a riot with scarves, mittens, and Starbucks gingerbread lattes. Which is why I have every sympathy with anyone who heads abroad to carry out their festive shop.

But how can you make sure you’re not ripped off when buying presents overseas?

Currency cards

So you’ve booked a weekend away, packed away your comfiest ‘traipsing round town’ shoes and prepared yourself mentally for two days of hardcore gift buying. The next concern is considering how to pay for those presents!

Top of the list of things to avoid is changing your cash at the airport.

Research from Caxton FX into rate fluctuations across various currency exchange methods shows that your shop will be around 7% pricier if you change your cash at the airport instead of using a pre-loaded currency card.

Currency cards work a bit like regular debit cards and are generally the most cost-effective way of spending abroad. They come in a variety of denominations and allow you to top up before you leave and then spend while overseas. However, unlike most regular debit cards, the majority of currency cards come with no currency exchange, transaction or ATM charges.

Here are some of the best currency cards around at the moment:

Rates correct as of 28 November 2011

As you can see, you’ll get the best exchange rate with FairFX. However this particular card is the only deal that carries a fee for ATM transactions.

The Caxton FX card will be your best bet if you’re planning on frequently pulling out wads of cash as it has no ATM charges and a better exchange rate for Dollars and Euros than the Travelex and My Travel Cash deals. However My Travel Cash does offer 1% cashback on all your purchases.

FairFX, Caxton FX and My Travel Cash all also offer a global multi-currency card. But these accounts do come with currency conversion fees that range from 1.5% to 2.99%.

Travelex also has a global card, as well as a spread of individual currency accounts covering a larger range of countries than most other providers.

However there are some downsides to these deals.

Downsides

Currency cards are not covered by Section 75 of the Consumer Credit Act 1974. This Section grants you protection for purchases worth between £100 and £30,000 and made on a credit card. So if any presents are lost, stolen or go bust after you’ve bought them, you’ll be able to claim back against your credit card provider.

Since currency cards are not afforded this cover, it may be a good idea to make any large purchases using a credit card. Unfortunately credit cards with fee-free overseas spending are somewhat few and far between, however there are still a handful floating about.

Halifax’s Clarity Card offers free currency exchange and zero ATM fees. However you will be charged interest from the moment you withdraw any cash.

Sainsbury’s Gold Card is also 0% for currency exchanges and ATM withdrawals. What’s more the account will not charge you any interest on cash withdrawals if you clear your balance in full every month. However you will have to pay £5 per month for this deal.

Nationwide’s credit card also comes with commission-free spending abroad. But you will have to build up an allowance through domestic transactions to take advantage of this.

One good thing about Section 75 though is that not all of the purchase needs to take place on the credit card. So you could just put £1 of a £100 purchase on the card, and still benefit from the protection!

However Section 75 protection won’t protect you for everything.

Travel insurance

Getting hold of the right travel insurance policy is also essential if you’re heading overseas to do your Christmas shop. A basic policy may not give you the level of protection needed to cover all your purchases. Make sure you check the total item limits and the single item limits for any claims before taking out any policy.

It’s also important to know exactly how you make a claim on your policy and what you need to present to your travel insurer. Most providers will require you to make a claim within 31 days of the incident. You may also need some form of local confirmation of the incident. For example, if a present has been stolen, documentation from a local police station may be required.

Tax

Keeping your gift purchases within HMRC limits is also vital in order to avoid a huge airport tax bill.

If you’re arriving back in the UK by commercial sea or air transport from a non-EU country you can bring up to £390 worth of goods for personal use back without paying VAT or customs duty. This excludes tobacco, alcohol and fuel, which has its own limits.

However if you are returning from an EU country you bring back as many goods as you like (for most goods types) without paying any additional tax.

Online overseas ordering

Finally, if you’re planning on ordering presents from abroad this Christmas or sending gifts out of the country, take a look at this article and have a read of How to avoid fraud if you’re shopping online today for some tips and hints on how to make sure you’re not caught out.

Are you looking abroad?

Are you heading overseas to do your Christmas shopping this year? Have you had any bad experiences ordering presents from abroad?

Let us know using the comment box below.

More: This year’s biggest Christmas rip-offs | Get a best buy mortgage