If you’re looking forward to a summer holiday, we take a look at some of the options available to help you pay for it, so you can make the right decision for you.
1. Use your disposable income or savings
Paying for your holiday using your disposable income or money you’ve saved up is perhaps the most sensible option, simply because it means you won’t have to borrow or worry about paying back what you owe.
However, even if you have the cash in the bank, it could be worth using a credit card to pay for your holiday to take advantage of the purchase protection you get from using a credit card.
In short, if you pay for your holiday using a credit card and the holiday company goes bust, you’ll be able to claim the money back from your card issuer.
Even if you only pay for the deposit on your card, as long as the full cost of the holiday is between £100 and £30,000, you’ll be covered by the Consumer Credit Act.
Once you’ve made the payment on your card and that protection’s in place, it’s a good idea to use the money you’ve set aside to pay off the balance in full to avoid paying any interest.
2. Cashback credit card
If you are confident you can pay off your credit card balance in full every month, you could consider using a credit card that offers cashback and earn something back for your spend.
For example, the American Express Platinum Cashback Everyday Credit Card offers 5% cashback on your purchases during the first three months (up to £100 cashback), which could be a good option if you pay for your holiday during that time.
After the first three months, you’ll be eligible for 0.5% cashback when you spend up to £5,000 a year, and 1% cashback when you spend over £5,000.
You need to spend £3,000 or more a year to qualify for cashback.
However, only use this card if you know you can clear your balance every month, otherwise you’ll pay interest at a rate of 22.9% pa (variable), and this will far outweigh the benefits.
The card has a representative rate of 22.9% APR (variable)*.
3. Rewards credit card
If rewards are more your thing, and you regularly shop at Sainsbury’s, the Sainsbury’s Bank Dual Offer credit card allows you to earn Nectar points – you’ll earn two points for every £1 you spend on Sainsbury’s shopping and fuel, and one point for every £5 spent elsewhere.
You can also earn up to 7,500 bonus points – each time you spend £35 or more on Sainsbury’s shopping in the first two months (up to a maximum of 10 times), you’ll get 750 points. T&Cs apply.
The card also offers up to 28 months at 0% on purchases, although you may be offered 25 or 22 months, depending on your circumstances. Once the 0% deal is up, you’ll pay 20.95% pa (variable). The card has a representative rate of 20.9% APR (variable)**.
Alternatively, if you often fly with British Airways, the British Airways American Express card offers new members 5,000 bonus Avios points when you spend £1,000 in your first three months of card membership.
You will also be able to collect one Avios point for virtually every £1 spent. However, you will need to clear your balance in full each month, otherwise you’ll pay 22.9% pa (variable). The card has a representative rate of 22.9% APR (variable)*.
The Virgin Atlantic Reward credit card allows you to collect 0.75 Flying Club miles for every £1 spent on every day purchases and 1.5 miles for every £1 spent direct with Virgin Atlantic or Virgin Holidays.
You can also earn 5,000 bonus miles with your first card purchases, so long as they are carried out within 90 days of opening your account.
Again, be sure to clear your balance each month, otherwise you’ll pay 22.9% pa (variable). The card has a representative rate of 22.9% APR (variable)*.
4. Interest-free purchase credit cards
If you are unable to pay for your holiday in one go, a 0% purchase credit card could help you to spread the cost of your holiday interest-free over a number of months.
However, you’ll need to make sure your credit limit stretches to your holiday requirements and avoid spending more than you can afford to pay back. Try to clear your balance before the 0% deal ends and interest kicks in.
As mentioned above, the Sainsbury’s Bank Dual Offer credit card offers up to 28 months at 0% on purchases, although you may be offered 25 or 22 months, depending on your circumstances. Once the 0% deal is up, you’ll pay 20.95% pa (variable). The card has a representative rate of 20.9% APR (variable)**.
The Barclaycard Platinum Purchase Offer credit card also offers interest-free purchases for 28 months. After this, you’ll pay 19.9% pa (variable). The card has a representative rate of 19.9% APR (variable)***. You won’t get this card on any other comparison site.
Also keep in mind you’ll need a good credit score to qualify for the most competitive credit cards.
Our Eligibility Checker will help you to see which credit cards you’re most likely to be accepted for, without harming your credit score.
Considering a staycation?
Even if you’re looking at staying in the UK this summer, holidays at home often don’t come cheap, so make sure you work out exactly what you can afford before you pack the car and head for the hills. Or the coast. Or the city.
When it comes to booking your holiday, it makes sense to book your travel insurance while you’re at it. Not only can sorting it early get you a better deal, it can also cover the cost of your holiday if something goes wrong and you can’t get away.
*Representative example: If you spend £1,200 at a purchase rate of 22.9% (variable) p.a. your representative APR is 22.9% APR (variable).
**Representative example: If you spend £1,200 at a purchase rate of 20.95% (variable) p.a. your representative APR is 20.9% APR (variable).
***Representative example: If you spend £1,200 at a purchase rate of 19.9% (variable) p.a. your representative APR is 19.9% APR (variable).
All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.
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