Over 10 million UK adults will get into debt this year in order to pay for their summer holidays, according to a survey.
The research, by protection insurance company Bright Grey, reveals almost a third of UK adults will use credit cards, take out a travel agent payment plan or borrow money from friends or family to fund a break in 2010.
Of those people who will borrow to pay for their holidays, Bright Grey says, more than half will be unable to repay their debts straight away. This means they could face additional interest charges, with credit card borrowers potentially paying out hundreds of pounds extra for their holidays if they use the wrong type of plastic.
0% credit cards for spending
Many credit cards now come with typical APRs as high as 18.7%, so paying for your holiday with one over a long period could prove very costly.
According to Bright Grey, the average break taken by Brits costs around £1,200 – which means taking more than a month to repay your debt on an expensive credit card could see you slapped with over £100 in interest charges.
Which? borrowing and debt expert Martyn Saville says: ‘While it doesn’t seem sensible to spend on a credit card in order to fund your summer holiday, if you must do so it’s crucial to avoid using the wrong card. Using a 0% on new purchases credit card, rather than a standard card, could allow you to spread the cost of your holiday without racking up extra debt along the way.
‘Of course, it would be preferable to save for your summer holiday in advance, rather than worry about paying for it long after your tan has faded. Opening an instant access savings account and depositing just a few pounds per week could help you get some summer holiday cash together pretty painlessly.’
Best credit cards for use abroad
Furthermore, many credit cards have a nasty sting in the tail if you use them abroad – so you should consider whether it’s sensible to pay with plastic while you’re on holiday, as well as during the booking process.
Extra fees and charges could add significantly to the cost of overseas transactions on some credit cards – yet others are good for use abroad. Moreover, it makes sense to use a credit card in some situations because if an item or service you’re paying for is worth between £100 and £30,000 you will have extra protection under Section 75 of the Consumer Credit Act.
For more information on 0% credit cards for spending, check out the comprehensive Which? credit cards review. Meanwhile, for help with choosing the best credit card for spending abroad and tips on getting great value travel money, read our new and updated Travel money guide.
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