When a holiday costs more than you expected. What are the most common mistakes when paying abroad?
The financial side of travel is often one of the factors that can turn a peaceful holiday into an unexpectedly expensive experience. This is not only because of the prices at the destinations, but also because of exchange rates and fees that one is often not even aware of. Many people still believe that bank charges are a thing of the past and that the card must always be the best value. But the reality is a bit more complex.
All you have to do is withdraw money from an ATM abroad and not worry about withdrawal fees, or say one wrong "yes" at a cashier abroad and an innocent payment becomes a few percent surcharge. Experts say this happens far more often than anyone would expect.
The exchange rate minefield. Why the right choice of currency makes all the difference to how much you pay
The biggest pitfall of foreign payments comes at the moment that lasts five seconds, when the terminal offers the option to pay in Czech crowns. The amount you understand appears on the display. So why not? The answer is simple - because it makes it more expensive for you.
This mechanism is called Dynamic Currency Conversion (DCC). While the merchant - or ATM - will offer you a conversion in crowns, it will use an exchange rate that it determines. And this is usually noticeably worse than your bank's rate. The difference goes into the service provider's pockets, not yours.
"The right choice is always to pay in the local currency," reminds Partners Bank analyst Martin Koci. According to him, DCC is the most common reason why people make an otherwise simple trip more expensive. He also recommends setting up a service in your banking app that works so that if you accidentally confirm a payment in crowns, the entire transaction is cancelled. In practice, this means only one thing: when the terminal asks you if you want to convert the amount into crowns, the answer is always no.
The main advantage that Parters Bank offers to travellers is zero exchange rate surcharges. Thus, when paying abroad, the client pays only according to the current exchange rate of the European Central Bank (ECB). They do not pay any additional exchange rate surcharges, which are normally 2-4% for banks. This brings additional financial savings to people.
How much can I save? A few crowns for a romantic dinner, thousands for a holiday
Exchange rate policy is often perceived as a technicality, but its impact is very concrete. If it differs by three percent - and such differences are not uncommon - then on a bill of 40,000 (a perfectly normal amount for a week's holiday for two people) you will leave over a thousand unnecessarily.
"The difference can be several percent of each payment. For larger expenses, it equates to hundreds or thousands of crowns a year," adds Koci. And here's the important point: this money is not an extra cost for the service. It's purely the difference in how and where the currency conversion takes place.
That's also why Partners Banka has chosen a model that doesn't limit the better rate to premium packages or active clients, according to Koci. The more people travel, the more they are looking for simplicity while not wanting to wonder if their card qualifies for a favorable conversion.
Safety first. Why a card is no longer a card
While the main issue used to be how to avoid fees, today there's a second issue - how to pay so that the card doesn't fall into the wrong hands. Indeed, tourist zones, hotel guarantees and online purchases via unfamiliar websites are environments where the risk of card misuse multiplies.
Virtual one-time cards are therefore becoming increasingly popular. These allow the card to be used once, with a new card automatically created after payment. If the card details fall into someone else's hands, they are worthless.
"The one-time card is renewed with a new number after each use. The client does not have to apply for a new card, the system will generate it automatically," explains Koci. On the move, this is a guarantee that even if the card is loaded into an unfamiliar application or loaded by a poor-quality terminal, it cannot be misused. You can create this card as soon as you create an account.
Mobile instead of wallet. How travel habits are changing
However, the younger generation in particular no longer even cares if they have their card on them. Rather, they are more concerned about whether their phone is charged. Apple Pay, Google Pay or Garmin Pay are now the standard and have made travelling much easier. There's no need to search for your card in your backpack, see if it's fallen out somewhere, or worry about leaving it in the hotel.
"Younger people want everything on their mobile. Banking needs to be simple, fast and fee-free," says Koci. He says it's not a trend, but the new normal - for a generation that books accommodation at the last minute and buys train tickets in an Uber on the way to the station, managing finances needs to be just as intuitive.
Multi-currency accounts: ideal for digital nomads and those who simply travel a lot
In recent years, the number of people who travel not only for holidays but also for work has been growing. International conferences, short stays, longer workshops, freelance nomadic life. For such situations, it makes sense to be able to hold multiple currencies in one account.
Partners Bank is now preparing a multi-currency account that will allow you to manage up to 15 different currencies. In practice, this means that you can conveniently buy the currency you need before you travel and then pay directly in it. At the same time, if you have some currency left over from a previous trip, you don't have to exchange it back and forth unnecessarily.
"Clients will be able to use the card to pay directly in the currency they need while buying or selling it according to their needs," explains Koci. For those who change destinations faster than the seasons, this is a significant simplification.
Less paperwork, more experiences
Travelling today is easier than ever. Yet the financial side is becoming one of the places where people most often make mistakes, especially unknowingly. Proper currency conversion, secure online payments, intuitive apps and the ability to travel with just your mobile in your pocket are what save money and nerves today.
And if you get it right before you fly, your holiday can start before the boarding begins. And the main worry becomes whether he'll have enough space on the beach, not whether more money has disappeared from his account than he expected.
