Why has my holiday deposit ended up costing so much?

We’ve been contacted by readers expressing concern about how low deposits placed with multinational travel companies can end up costing a lot more than anticipated.

While the initial promise of low deposits is attractive, they can sometimes come with terms and conditions attached that are easy to miss and that can leave people facing higher-than-expected costs if they have to cancel or rearrange plans.

We are not alone in hearing such stories and British consumer magazine Which? recently highlighted the issue.

While consumers may assume that this figure is the only amount they have committed to paying, in many cases this is merely a first instalment towards a larger deposit

—  Which? magazine

“When holidaymakers book a package holiday, they’ll often be presented with multiple payment options, which can include paying an initial amount advertised as a ‘low deposit’,” said Which? “While consumers may assume that this figure is the only amount they have committed to paying, in many cases this is merely a first instalment towards a larger deposit.”

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The magazine expressed concern that some firms are “not clearly signposting this at the point of sale, leaving customers unexpectedly out of pocket in the event they need to cancel their plans”.

The consumer champion noted that some people who sought to rearrange holidays over the course of the summer just passed, were threatened with court actions if they did not pay the remainder of the deposit.

Which? researchers in the UK tested making an online booking with Tui, finding that in addition to its “low deposit” offer, Tui customers can also select a “no deposit” deal on selected trips. On the payment page the small print sets out that customers are liable for a “full” deposit amount should they cancel their “low deposit” trip, while more confusingly, those on a so-called “no deposit” holiday would also be liable to pay a non-refundable deposit.

The consumer group also expressed concerns about other firms’ low deposit schemes, with some appearing even more confusing.

When looking at a week-long package holiday for two people with loveholidays, Which? researchers were offered a “low deposit” of just £29 per person for the £3,490 holiday.

Which? accepted that loveholidays includes a link to its full terms and conditions under the heading ‘I understand and agree to the following’, but said it could be more explicit about the financial obligations in the main text

If selecting the low deposit option, loveholidays outlines a breakdown of future costs, calling them “instalments”. It does not clearly indicate that the first two instalments make up the remainder of a larger deposit, meaning a customer might wrongly assume they’d lose just £58 if they wanted to cancel. In fact, they’d be required to pay a further £1,439 to cancel this trip — the remaining deposit due.

Which? accepted that loveholidays includes a link to its full terms and conditions under the heading “I understand and agree to the following”, but said it could be more explicit about the financial obligations in the main text.

“As the cost of living crisis continues to stretch household budgets to the limit, ‘low’ and ‘no’ deposit holiday schemes can be an enticing option,” noted Naomi Leach of Which? Travel.

“However we have found many of these schemes can be confusing for holidaymakers, with cancellation fees and ‘top up’ deposit payments sometimes buried in the terms and conditions. If you’re considering a low deposit booking, always take the time to check the terms carefully, so you understand exactly what you’re liable for should you decide to cancel.”