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Money Hack – Beat the Holiday Debt Hangover

Now that the festive period is over and we are all starting to settle into the new year, lots of us are yearning for a bit of sun, sea, and sand. For years, January and February have been the busiest months of the year for holiday sales, with ATOL research suggesting that over 5 million people will be booking their summer holidays this month!

Research* suggests that the average Brit spends just over a quarter of their disposable income on their summer holiday, with just under a third borrowing money to pay for their trip away. At this time of year, we are all feeling the pinch, and money is a little tighter than usual, but with our handy money hack, you can afford to book that dream holiday and spread the cost.

How can I book my dream trip, and beat the debt?

 You could use a 0% interest credit card to spread the cost of a large purchase over several months, making this a good option to pay off a trip filled with sun, sea, and sand without any extra costs.

Providing you stick to the agreed terms, and pay back the cost of your holiday within the defined interest-free period; you won’t have to pay a penny more than the agreed cost of your holiday. This makes them the perfect choice for paying for high cost items, such as holidays, without having to pay the full amount upfront if you don’t have the funds to. This means you can still snap up those early-booking deals on package holidays, airfare and accommodation.

Is it cheaper to use a credit card or to wait?

Ultimately, there is no simple answer as it can all depend on how fast the price of your desired holiday goes up, how much it goes up by, and what you will have to pay.

Unfortunately, flights, hotels and package prices do fluctuate.  As the clock ticks down to the time you want to be jetting away, prices may increase, so it may be cheaper to book early to avoid the last-minute price hike. Experts say that by booking early, you can take advantage of early booking discounts such as meal deals, discounted child places, cheap night deals, room upgrades, and single traveller discounts – all of which can slash the cost of your holiday.  Using a credit card to pay for your holiday can make your money go further.

There are a few ways a credit card can help with paying for a holiday:

  • Spread the cost with a 0% purchase card
  • Enjoy an additional level of purchase protection
  • Earn frequent flyer miles or cashback
  • Get market exchange rates when you’re overseas.

How does an interest free credit card work?

Cards that offer 0% on purchases do not charge you interest for several months within an interest free period. For example, with a 12-month interest free period, the credit card provider will not charge you interest for those 12 months. But, you must keep up with your monthly repayments to maintain the interest free period.

How to choose a 0% purchase card?

Compare 0% purchase credit cards to find the best one to suit your needs, preferably one with the longest interest free period. These credit cards are generally the best as they give you longer to pay off the balance without being charged interest. You need to also consider the representative APR when comparing credit cards. This is the interest rate the credit card provider will charge you when the 0% period is over.

What are the other benefits of using a credit card to book a holiday?

So, not only can you benefit from a huge interest free period to spread the cost of your holiday, but under the Consumer Credit Act, booking your holiday through a credit card offers free protection. If you book directly with the holiday company, you’ll get your money back if the holiday company goes bust for all purchases between £100 and £30,000.

Some credit card companies also offer benefits that include cashback and rewards on credit card purchases, but these vary depending on the credit card provider. Using a purchase credit card comparison site can help you to find the best one.

* https://www.yourmoney.com/household-bills/brits-spend-quarter-disposable-income-holidays/

 

 

Award-winning writer, blogger, social media consultant and charity campaigner. Social Media Manager for BritMums, the UK's largest parent blogging network Freelance clients include Firefly Communications and Save the Children UK. Works with brands on marketing projects. Examples include Visit Orlando, Give As You Live, Coca-Cola and Kodak. Cambridge Law graduate with many years experience working across three sectors in advice, media relations, events, training and project management. Available for hire at affordable rates.

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