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Should you pay for your summer trip with credit? TRICIA PHILLIPS warns against building up a debt that lasts longer than the happy memories.

7 WAYS TO TAKE CONTROL OF HOLIDAY COSTS NE in four of us plan to use plastic to fund our fortnight in the sun this year, spending an average of PS720.

OBut one in 10 of us will spend around PS2,000, according to research by credit report firm

When it comes to repaying this debt, two thirds of people don't have a plan in place.

While we all want to get a break from the daily grind, it's important we think carefully before building up unaffordable borrowing - one holiday could result in years of misery if the debt then spirals.

A balance of PS2,000 on a credit card, charging a typical 18.9% interest, could take 24 years and two months to clear. This costs PS2,718 in interest if the borrower only makes the minimum repayment each month - which means years of financial strain.

Jacqueline Dewey, managing director at Noddle, said: "When it comes to the question of 'should I finance my holiday on credit?', for some this can be a feasible option, especially when the borrowing is in moderation and the money is paid back on time and in full.

"However, it's clear that some holidaymakers are running the very real risk of falling into financial trouble by overstretching themselves with credit, or not having a plan in place to pay back what money they owe.

"This could potentially affect their credit score, impacting on the types of credit they have access to in the future."

| SAVE UP: If you have a dream holiday in mind, start saving as soon as possible. By saving consistently, you'll have more chance of being able to pay for a large chunk of the trip without needing to use credit to fund it. Start a holiday savings account and set up a standing order to put something away regularly - get into the savings habit by putting away a small amount that you won't miss too much each week/month, then increase it gradually to the maximum you can afford.

| DON'T OVERSTRETCH: Many people choose to pay for holidays with credit cards, as it can be convenient and allows you to pay it off at a later date. But it's important to remember that ultimately, you have to repay the debt.

So, the less you put on credit the better. Not only will it make it less painful when it comes to repayments, it will also help ensure that you don't damage your credit score by biting off more than you can chew.

| LUXURY VERSUS NECESSITY: Remember a holiday is a luxury, not a necessity. Overstretching yourself on credit to pay for a trip can leave you struggling to buy essentials, or you could be floored by an unexpected bill on your return. Be realistic about your budget and what you can afford.

| REGULAR REPAYMENTS: Before putting your next big holiday on credit, consider how you'll pay it off. If you're looking to fund it using a credit card, make sure you'll be able to pay off any balances in a timely manner to avoid paying over the odds interest. Or worse, getting behind with repayments and damaging your credit score.

| BE CAUTIOUS WITH CARDS: If you need to apply for a new card to fund your holiday, be careful not to make multiple credit applications in quick succession. Why? Because many lenders view multiple credit applications within a short period of time as a red flag, as it suggests you may be desperate to get your hands on credit. If you're considering applying for a credit card, sign up to Noddle at and use the free card matcher tool to see which cards you may be eligible for before making an application.

| AVOID HIGH CREDIT BALANCES: If you are using credit to finance your summer trip, make sure you tread cautiously and don't spend too much of the credit limit available on a card. If you're unable to manage your repayments and can't show you're bringing down the balance, it could signal to lenders that your spending has got out of control or you are experiencing financial difficulty.

By regularly checking your credit report you can keep an eye on all your financial commitments which will help to ensure you stay in control of your finances.

| CONSIDER STAYING LOCAL: In the last few years, the UK pound has lost some of its value compared to foreign currencies such as the euro and the US dollar. This means you will be paying more to travel abroad and costs in resorts will be more expensive too. This will increase the likelihood you may have to use credit to afford the break. Would it be worth considering a "staycation" and decreasing your costs?
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Title Annotation:Features
Publication:Manchester Evening News (Manchester, United Kingdom)
Date:May 13, 2019
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