With Easter just around the corner, many of us will be escaping for a short city break. Research shows that on average, Brits spend 10 per cent of their salaries* on holidays each year. If you don’t have a flying carpet in the garage or a series of meditation retreats around the world, the cost of flights, accommodation and spending money can soon add up.
If saving for your city break has been low on your list of priorities, you may have to borrow money to fund a break this Easter. Plumping for a holiday loan shouldn't be a hasty decision, but it’s one way to make sure your plans actually get off the ground.
So what should you look for in a holiday loan? I have words of wisdom to help you find an enlightened loan and even save you money when you get wherever you’re going. Pull up a cushion, my friend.
Should I take out a holiday loan?
A holiday loan is just like any other personal loan – it allows you to borrow a certain amount of money with conditions, such as when you have to pay it back. A holiday loan can be a quick and hassle-free way to fund a city break at Easter. After taking out a loan, your payments will be fixed, so you'll know exactly how much you have to pay and when. A loan will give you access to more money than you would get from a credit card and you won't have to worry about any extra fees.
Reasons to be wary
Taking out a holiday loan can be a great way to help you get away, but it’s not all sunshine and Speedos. There are certain things you need to consider before diving in:
- Taking out a holiday loan isn’t a flexible option – despite all your best efforts, it’s sometimes hard to keep to a budget. Having to take a lump sum doesn’t give you much room for altering plans and could leave you short-changed.
- Like all loans, if you have a poor credit rating you could really struggle to get your hands on the best deals. Best thing to do is make sure you know your credit score before you start applying. Visit my Credit Reports section and witness the wisdom.
- There are alternatives – many credit card providers now offer an introductory 0% period, but be careful to pay off the agreed amount or it could cost you a whole lot more.
- You could also tighten your belt for a while and save up, or dip into your overdraft – but again, be careful you don’t incur any extra fees.
How do I save money when I'm out there?
You've either got your holiday loan or decided that you can scrape by without, but one thing's for sure, you don't want to waste any money when you're on your city break. It's an age-old question that’s been around since Julius Caesar nipped over to Gaul – is it cheaper to get money out before you go abroad, or use a debit or credit card when you are out there?
Using credit and debit cards abroad can end up costing you a lot in fees. Firstly, you’ll incur a foreign usage fee (usually about 3%) when you make a payment or withdraw money. Credit cards will also charge you interest on purchases, even if you pay off your bill at the end of the month.
The most important thing is to do your research and look up the fees that your card provider will charge. With all the fees added up for each time you use your card, it might end up being cheaper to have money converted before you go away.
A city break can be a great option to get away for a while, but the last thing you need is to be worrying about money in the run-up to it.
If you do decide that a holiday loan is the right option for you, make sure you shop around to find the best deal. You might not always have time to trawl through all the deals out there, so let me do the heavy lifting for you at moneyguru.com. Before you know it, your socks and sandals will be somewhere sunny.
Peace and loans,