Travel Travel Budgeting & Financial Planning 1 — Questions and Answers
Question 1: What is the primary advantage of using a travel credit card with no foreign transaction fees?
- Higher credit limit abroad
- Avoiding the 1–3% surcharge on every foreign purchase (Correct answer)
- Free airport lounge access
- Automatic travel insurance
Correct answer: Avoiding the 1–3% surcharge on every foreign purchase
Travel credit cards with no foreign transaction fees save travelers from the 1–3% surcharge that standard cards add to every international purchase.
Question 2: What is the '50/30/20 budgeting rule' adapted to travel?
- 50% accommodation, 30% food, 20% activities
- 50% pre-paid, 30% daily spending money, 20% emergency fund (Correct answer)
- 50% flights, 30% hotels, 20% food
- 50% savings, 30% spending, 20% investment
Correct answer: 50% pre-paid, 30% daily spending money, 20% emergency fund
A practical travel budget often allocates roughly 50% to pre-booked essentials, 30% for daily spending, and 20% as a contingency emergency fund.
Question 3: When is typically the cheapest time to book domestic US airline tickets?
- Day of departure
- 1–3 weeks before departure
- 6–8 weeks before departure (Correct answer)
- 12+ months in advance
Correct answer: 6–8 weeks before departure
Research suggests domestic US flights are typically cheapest when booked approximately 6–8 weeks before departure, balancing availability and price competition.
Question 4: What does 'travel insurance trip cancellation coverage' typically reimburse?
- Only hotel costs
- Non-refundable pre-paid trip costs if you cancel for a covered reason (Correct answer)
- All costs including non-covered cancellations
- Flight change fees only
Correct answer: Non-refundable pre-paid trip costs if you cancel for a covered reason
Trip cancellation insurance reimburses non-refundable pre-paid travel expenses when you must cancel for reasons specified in the policy such as illness or death.
Question 5: Dynamic currency conversion (DCC) at foreign ATMs or merchants should generally be:
- Always accepted for convenience
- Declined — it results in worse exchange rates (Correct answer)
- Accepted only at airports
- Required by law in most countries
Correct answer: Declined — it results in worse exchange rates
Dynamic currency conversion should almost always be declined as it applies a poor exchange rate set by the merchant, costing travelers more than using their card's standard rate.
Question 6: What is a 'per diem' in the context of corporate travel budgeting?
- A type of travel insurance
- A daily allowance for meals and incidental expenses (Correct answer)
- An international airline ticket fee
- A hotel loyalty program reward
Correct answer: A daily allowance for meals and incidental expenses
A per diem is a fixed daily allowance provided to employees to cover meals and incidental expenses during business travel.
Travel Travel Budgeting & Financial Planning 1
What is the primary advantage of using a travel credit card with no foreign transaction fees?