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Paying for your holiday: what are the options?

How to pay for your holiday

Financing that holiday you are holding out for may not be as daunting as you think.

Feeling like it’s time to get away? Are the white sands of Hawaii or the gothic architecture of Europe calling your name?

As much as holidays are fun and relaxing, they can also cost a bit of money. So when it comes to planning and managing your costs, you’ll want to be prepared.

A good first step is to figure out exactly how much you’ll need for your trip. If it’s going to cost more than you currently have saved in your bank account, you can either set aside time to save up the remaining amount or get your hands on some finance in advance.

Saving up

Whether you save all or part of the money you’ll need for your trip, the more you put away now the better position you’ll be in when you return from your travels. The last thing you want is to come home stressing about debts you’ve built up.

Tools like a budget and a savings calculator can help you set some realistic savings goals to work towards.

By booking your flights and accommodation in advance online with a debit card rather than a credit card, you won’t have to pay any interest and could save on booking fees. But if you do book with a credit card, you can avoid interest by making sure you pay off the purchase within the interest-free period.

By paying for your trip this way, you can start planning your next one as soon as you return!

Getting money in advance

Say you have a surprise wedding to get to in Thailand, or you’re just desperate to trade the Australian winter for the northern summer. In situations like these, you may not have the time you need to save up for your holiday.  

Paying for your trip with your credit card has its advantages. Depending on your card and the card provider, international travel insurance may already be included. Also, if you have a card that offers rewards you may be able to earn awards points to go towards your next trip. If your cash flow is irregular, you can then choose to make larger repayments in some months and smaller repayments in others.

A personal loan is another way to help you hit the road sooner rather than later. With a range of loan terms available, you can choose weekly, fortnightly or monthly repayments. You know when you’ll be finished repaying, and should you choose a fixed-rate loan you’ll also know exactly how much you’ll repay.

A combination approach

It doesn’t necessarily have to be one or the other when it comes to paying for your holiday with your savings or using a personal loan or credit card.

A mixed approach – for example, paying for your airfares or accommodation with your credit card or a personal loan then accessing your savings for travel money – can be a good strategy for taking the trip of your dreams while also staying on top of your finances.

Don't forget that with exchange rates continually shifting, it can also pay to think ahead if you are heading overseas and lock in your rate with a Travel Money Card so you know how much you'll have to spend.  

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.