How travellers can avoid the Christmas Tax

 

It may be time for festive cheer, but the holiday period is also renowned for being pricey.

Unfortunately there are several traps you should steer clear of, particularly if you’re thinking of jet-setting overseas over the Christmas season.

Whether it’s paying for a gift card on credit, being left to foot the bill for a surcharge tax when dining at a restaurant on a public holiday, paying too much for airfares, or simply overpaying for delivery/shipping, there are many ways we cough up extra money (without realising it). These inflated costs fall under what we call the ‘Christmas tax’.

Australian travellers could be paying 103% more over the holiday season, according to a new finder.com.au analysis. The analysis also found that the Gold Coast is the destination with the highest ‘Christmas tax’.

The study reviewed the top 10 global destinations for Australian travellers, as well as the Gold Coast, taking into account the cost of travel. This includes hotel, flights and car rental, comparing both the peak and off-peak periods.

Surprisingly, travelling to the Gold Coast during the Christmas break could set Aussies back $8,907 on average. Whereas, it would set them back $4,391 if they travelled during an alternative period such as November or February.

It’s important to be conscious of inflated prices and money traps during the holiday season to avoid the Christmas Tax. Here’s how:

Compare travel-related products

Doing your research and comparing different travel-related products is a good way to cut back on costs.

For flights, accommodation, travel money cards or insurance, compare your options to lock in a competitive deal. If you’re looking at travel money credit cards, review the purchase rate as well as an annual fee or foreign currency conversion fee that may apply. The benefit of a card with a low purchase rate may be outweighed if the card comes with a high annual fee. Ideally, find one with no annual fee at all.

Draft a Christmas budget

It may be the last thing you feel like doing this holiday season, but setting yourself a budget (if you haven’t already done so) could give you more structure when it comes to your Christmas expenditure.

Create a list of the people you want to buy for and set yourself a price limit for each person. You should also list the additional expenses you’re likely to encounter during the holiday period, such as accommodation, travel, eating out, and consider how you’ll fund these additional costs.

Use the sharing economy

The sharing economy can be useful when it comes to earning some extra cash in the lead up to the holiday season.

For instance, renting out a spare bedroom in your home (or even the whole property if you’re going to be away) can create an additional income source. A recent finder.com.au study found that 85% of homeowners have a spare room they could be renting out.

Don’t pay for a gift card on credit

Some retailers will charge you a cash advance fee if you buy a gift voucher on your credit card, and they may charge this fee without warning.

If you want to purchase a gift card, consider putting this on a debit card instead.

Keep an eye on delivery/shipping costs

If you’re thinking of doing some Christmas shopping online, make sure you don’t get hit with excessive delivery/shipping costs.

Before you check out, review the cost of delivery so you know what you’re getting into. As a rule of thumb, try to steer clear of retailers that charge more than 10% for delivery/shipping.

Watch out for online scams

As we gear up for the festive season, we’re vulnerable to online scams.

To avoid scams, don’t reply to any unsolicited emails or phone calls, protect your personal information, and the only shop online with reputable retailers and providers.

Public holiday surcharge

Service industries such as hospitality businesses and taxi providers enforce public holiday surcharges, which can range from 10 – 20%.

If you’re thinking of dining out on a public holiday, you may want to think twice.

It’s a joyous time for many, but don’t fall for the Christmas tax.

Being aware of these money traps and knowing how to avoid them will allow you enjoy the holiday period without accruing excessive (and avoidable) costs.

If you want to get ahead for next year, download our handy personal budget planner to work out your income, expenses and most importantly what you can use to save and invest.

 


Article by Bessie Hassan, Money Expert at finder.com.au

Disclaimer: all information contained within this article is of a general nature. Do not rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.