Four Tips for Paying for Your Holidays
Do you need a holiday? The majority of us are in need of a vacation. If you’re struggling to figure out a way to pay for your holiday, then take a look at these budgeting and money saving tips that could help you get away from it all while not breaking the bank.
- Save Your Disposable Income
Rather than borrowing money to pay for your holidays, it makes more sense to save up your leftover cash and take a holiday when you can pay for it up-front.
There are some benefits to paying on a credit card – if anything goes wrong and you don’t get the holiday (Cancelled flights, or the holiday company going bust) then you can claim the money back from the card issuer.
So, if you have a credit card, put the holiday on that, but then pay it off immediately, before you pay interest on it. You can often claim back if things go wrong even if you only put the deposit on the card.
The consumer credit act has limits for what you can claim, but for a holiday to be considered above that bounds it would have to cost tens of thousands of pounds – so, make the payment on your card to get the protection put in place, and then pay off the balance so you have an interest free, and stress free holiday. Everyone wins.
- Use a Cashback credit card
Many credit cards offer cashback – so if you’re already using the credit card for insurance, why not look at one with rewards as well – that way you’ll save money and potentially get a little bit back which could be nice when it comes time to start doing your Christmas shopping.
There are cashback rates of up to 5% with American Express, so if you book a holiday you could a pretty significant amount of cash back during the first few months. The five percent rate is only for the first three months for a new cardholder, the rest of the year it’s 1.25%, with a double cash back offer in your ‘anniversary’ month.
You’ll have to pay an annual fee of £25, and make sure that you don’t end up paying interest, because the interest rate is 18%, which would wipe out any cashback and then some! But it’s still a nice deal.
if you have an account with Nationwide, then take a look to see if you’re eligible for their Select Card. The cashback isn’t as generous – it’s just 0.5%, but you can get commission-free purchases abroad, which means that it’s a nice alternative to carrying large amounts of foreign currency with you.
Considering the commissions, exchange rates and fees that you can face when you’re trying to spend abroad, anything that cuts that cost will help to make your holiday that little bit less stressful.
- A Loan
There are all sorts of short term financial products that could help you in such a scenario and provide you with the finance to go on holidays.
If you’re credit score is good enough then you can go to the bank and get a bank loan. Currently interest rates are quite low, so getting such a loan shouldn’t be a significant problem.
If you don’t have as good of credit then money expert recommend that maybe you consider a guarantor loan. They are usually a lot more competitive than other sorts of similar loans for people with that sort of credit and are worthy of consideration.
- Alternatively, Look at a Rewards credit card
Cashback is nice, but sometimes rewards can be better value for money. The Barclaycard Freedom Rewards Card offers a point for every pound you spend, and two points for spending at supermarkets or petrol stations.
You can get three points for spending at selected retailers, and there’s a bonus if you hit a spend of £500 within the first three months, giving you £30 worth of high street vouchers.
Points sometimes end up being worth more than cashback – assuming that you spend the vouchers on things that you would have bought anyway. But, again, you need to make sure that you clear the balance in full.
Offerings such as the Nectar Credit Card make a lot of sense if you’re the sort of person that would usually shop at Sainsbury’s. The points you earn could pay for future grocery shopping.
Alternatively, there are cards for people who like to fly frequently, that offer miles with various airlines and flight clubs.
It pays to be emotionless with this kind of spending, because the card companies bank on people not spending the points, or on using the points to spend more than they otherwise would have – you’re not saving money by getting a discount on something you wouldn’t normally buy.