5 ways to save for your dream summer holidayStart saving now for next year's holidays

11 April 2011

Holiday villa

Start saving now for next year's holiday

Saving for your dream summer holiday is something that you might be thinking about at the moment, whether it be paying for the holiday itself or having the money to spend when you are abroad.

It may be that you haven't the funds to go away this year, but are planning to have a trip next year. We outline the best ways to initially save for, and then pay for, that dream holiday.

1. Choose a Best Rate instant access savings account

Instant access savings accounts have the advantage of allowing you to access your money at any time. It may be that you decide to fly off to Greece or Spain at the last minute and need to get your hands on your cash straight away.

The top instant access Best Rate accounts are paying around 3% at the moment.

2. Fixing the date

If you are planning a holiday for next year or perhaps an around the world trip in the future, fixed-rate deals will tie up your money until then to ensure that you aren't tempted to dip into your holiday fund.

There are currently some 1-year fixed-rate deals paying around 3.5%, while you can get nearly 4% on 2-year fixed rate accounts.

3. Isas are the answer

Now that we are in the new tax year you should make sure that you've used up your tax-free cash Isa allowance for 2011/12 before you put money into other savings products. You are allowed to put up to £5,340 into a cash Isa up until 5 April 2012.

4. Regular savers for all you ravers

Regular savings accounts are great for putting money away each month to save for a particular purpose, in this case that cruise you've had your heart set on for years or catching up with the relatives in Australia or New Zealand. Use our savings account calculator to access the best current deals.

5. Go now, pay later....

There is a way in which you can go on holiday now and pay for it later, without incurring high interest charges. The best credit card deals with 0% on purchases allow you to pay for the holiday now and pay no interest for up to 15 months.

Paying by credit card also means you'll get extra protection under section 75 of the Consumer Credit Act.

Make sure you keep up the minimum monthly repayments on the credit card though, or you could lose the 0% interest deal.

...and when you're there

It's also important to make sure that you get the most out of your money when you're away by using the best card options. The best credit cards to use abroad charge you nothing extra for using them for purchases in Europe. Many also have no extra fees for shopping worldwide.

Wherever you choose to go, have a great holiday, and don't forget to check out our Best Buy travel insurance policies before you travel overseas.

pound coins

Which? Money when you need it

You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.

Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.

Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast

For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.