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7 Tips for Buying Duty Free

One trip to Cozumel or Grand Cayman and you can't miss the tourist infested diamond shops. Airport frequenters can't miss the duty-free cosmetics, liquor, and cigarettes luring money-spending travelers to shell out big bucks for a seeming good deal. But are these prices truly good savings or just tourist traps?

Buying an item duty-free means you won't have to pay the customary tariff prices when returning to your home country. Traditionally desirable duty-free goods are those produced in the visited countries that are hugely marked up back home due to import taxes. Liquor, like Russian vodka or Mexican tequila, is traditionally much higher when bought in the States. In addition to avoiding the import tax, many duty-free shops even curtail the local sales taxes, which can save a huge amount of money from buying the same product locally. But the duty-free market has expanded to include items that may or may not be a good deal to buy duty free. Only the knowledgeable shopper can decipher between the deals and the duds.

If you plan on making some big duty-free purchases while traveling abroad, do your research first. American tourists are notoriously gullible and easily wooed by foreign accents. Keep these things in mind before pulling out your wad of Euros:

  1. First of all, know that the goods you are buying duty-free are luxury items. They are well beyond the sphere of frugal living. You can enjoy a full life without high-end cologne, Thailand silks, and cancerous cigarettes.
  2. According to the Travel Channel's Gretchen Kelly, some of the best buys you can get worldwide include: Unique Hello Kitty products in Tokyo, velvet scarves and reproductions from Venice' Marco Polo Airport, Montreal maple syrup, and kitschy calaveras from Mexico.
  3. Review the limitations on duty free items. You may transport up to $800 worth of products back home, beyond that you'll have to pay a 3% tax--and it increases from there. Plus there are limits on the amount of liquid you can bring back. The U.S. and U.K. are much more strict on liquid rules than other countries and they change frequently, so know before you go.
  4. David Farley of Budget Travel Magazine found that in countries with a weak currency, like the British pound, offer great deals on liquor. The price of a bottle of Absolut Vodka is near half as much as a retail store in the U.S. But he warns consumers of a larger sphere of products, like cosmetics and accessories, that aren't much cheaper.
  5. Unless you want the hassle of a potential raw deal, steer clear of diamonds purchases abroad. If you have a well-informed knowledge of stones and understand how to shop for them, be my guest. But to spend that much money at such a high risk is a bit foolish in my book. Diamond Central in Mexico can offer every "guarantee" for quality, but just try to file a grievance when you get back to Ohio. Outlook not good.
  6. Purchase your goods at the end of your trip. Give yourself adequate time to shop around and secure your bearings. Plus you don't want to risk running out of cash early. If you can't live without it on day one, consider buying it if you feel the same on the last day.
  7. The Value Added Tax (VAT) in Europe only applies to EU citizens--if you are slapped with this charge it is refundable to foreigners. Read up on how to secure a refund before going to get even lower prices.

Abstain from the shopping frenzy generated by mobs of tourists on foreign soil. Unless your trip is planned exclusively for shopping, stay out of the shops the majority of your trip and enjoy what you came to see.

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