Top 10 ways to save on Christmas travel

Good money habits can make a relaxing summer holiday more enjoyable. Source: National Features

The biggest expense, however, is often travel, and research last month by the Commonwealth Bank found 3.2 million Australians are planning a Christmas holiday and each adult will spend an average $1152 on their trip.

So we've asked the experts to explain how you can cut travel costs this holiday season.

1. Be flexible

MyBudget founder and director Tammy May says flexibility "is the key when planning a holiday."

"You can check the date ranges and choose the ones that are the most affordable," she says.

"Flying on a Monday versus a weekend may be cheaper, but the longer you leave it things do get more expensive."

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2. Set a budget

Be realistic and include all your expenses that you will be hit with while you're away, May says.

"Include hire car fees, taxis, food and all those expenses," she says. "You can get caught out on holidays shopping because you get into the mindset of spending more money when you don't need to."

3. Use wi-fi

May says when travelling abroad look at ways to communicate with friends and family without being hit with huge expenses.

"Look at using Viber, if you're on wi-fi, it allows for free calls, texts," she says. "There are other apps you can use that are free to leave voicemail messages too if you are hooked into wi-fi."

4. Credit card costs

AMP financial planner Tony Rigby says look carefully at the fees attached to using plastic, especially if travelling overseas. "Take into consideration the normal fees you are paying," he says.

"And if you haven't budgeted properly and you've blown out your budget when you're overseas, are you going to be able to cope when you get back with the interest rates on cards around 20 per cent?"

Rigby says ATM charges can vary from bank to bank.

5. Currency exchange

If heading overseas, don't leave buying foreign currency to the last minute, avoid expensive airport conversions, and take a combination of cash, travel cards and credit cards, the Commonwealth Bank says. "By reviewing the resources and financial products available before departure, travellers can avoid being hit with unexpected international transaction fees," CBA executive Michael Cant says.

AMP's Rigby says prepaid travel money cards are a great way to carry money, and remove the issues that surround carrying large wads of cash.

"It's a bit like a credit card except it's a standard cash card and it's loaded up, for example by using BPAY," he says.

"They offer all different currencies and you are locking in an exchange rate in advance. You know exactly how much you are going to pay and can reload it whenever you want."

6. Travel insurance

Rigby says there are ways of cutting costs when taking out travel insurance cover.

He says some financial institutions offer insurance cover with credit cards, but it depends on how much you spend on the card to whether or not you'll be entitled to insurance cover.

7. Sign up to travel newsletters

If you haven't booked yet, Fulvia Montresor, senior director at comparison site hotwire.com, says it's wise to sign up to online travel newsletters. "Some hotel and airline sites have a weekly sale period or "happy hour" where prices get slashed," she says.

"If you don't like spam clogging up your inbox, start a new email account for deals."

8. Country choice

With the Aussie dollar remaining strong, hovering about US$1.04, Montresor says look at the currency rates at destinations you might like to travel to in order to make your holiday more economical.

"Think about travelling to the US and Europe as you will get more bang for your buck in these destinations," she says.

"Also don't forget to claim back your value-added tax (VAT) if you've shopped in Europe." It can be up to 20 per cent and varies between retailers and depends on how much you spend.

9. Reserve a car now, shop later

Montresor says there are ways to get good deals on car hire. "Find a great rate now and reserve it (the car)," she says. "As you get closer to your travel date be sure to check deal sites to see if any last-minute, discounted rates have become available."

If there is a better deal, cancel your reservation, which should be fee-free, and lock in the cheaper option.

10. Accommodation choices

Rigby says make sure you are booking accommodation that's in a convenient location.

"Look at booking a place that is self-contained or has cooking facilities to cut down on costs and make it cheaper. Research your location and spend the time to make sure the place is within easy reach of things you want to see, make sure you're within reasonable walking distance of places."