Racked up holiday debt? Here’s what to do

Is your bank balance looking a little sorry for itself following the summer holidays? If so, here’s how to whip your finances back into shape.

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If your summer holiday is a distant memory and all you’ve got to show for it is a maxed out credit card and empty bank account, we’ll show you how to get your finances back on track.

Credit cards

If you used a credit card to pay for your holiday and other summer expenses, the first step is to check how much interest you’re being charged and whether you can lower it.

If you are paying a high annual percentage rate (APR) on what you owe, it can be a good idea to move your debt to a 0% balance transfer credit card.

Many of these cards offer lengthy introductory interest-free deals which will give you a bit of breathing space and help you to clear your debt more quickly and cheaply. Just be aware you’ll usually have to pay a transfer fee.

The Halifax Balance Transfer credit card, for example, offers 0% on balance transfers for 34 months, so long as they are carried out in the first 90 days. The card has a balance transfer fee of 3% of the amount you transfer.

Once the 0% deal ends you’ll pay 19.95% pa (variable), so try to clear your balance before then. The card has a representative rate of 19.9% APR (variable)*.

If you’re unable to pay off your balance before the interest-free deal ends, you’ll need to move it to another 0% balance transfer card and pay another fee.

An alternative is to use a low rate credit card which offers a low rate of interest for the life of the debt.

The Lloyds Bank Platinum Low Rate credit card, for example, offers a representative rate of 6.4% APR (variable)**. There’s also no transfer fee, so long as you carry out any transfers within the first 90 days. After that it rises to 3%.


If you’ve used your overdraft to fund your holiday spending, check whether you’re being charged interest or fees for the privilege. If you are, see whether you can switch your current account and benefit from an overdraft that won’t charge you.

The Nationwide FlexDirect Account, for example, offers an interest-free overdraft for the first 12 months***.

You’ll need to do your best to pay off your overdraft within those 12 months as once they are up, you’ll be charged 50p per day on arranged overdrafts.

Alternatively, if you can cope with a relatively small overdraft, the First Direct 1st Account offers a consistent £250 interest-free overdraft****. You’ll be charged 15.9% EAR (variable) on arranged overdrafts above this.

If you switch to this account you can choose from a range of eight rewards worth up to £150, including a £150 Expedia voucher and a Bose SoundLink Mini II Bluetooth which is only available if you switch through MoneySuperMarket. You must pay in at least £1,000 in the first three months to qualify and be a new customer.

Be aware you'll need to pay in at least £1,000 a month or have another product with First Direct, such as a mortgage, to avoid paying a £10 monthly fee on the account.

Another way to tackle your overdraft is to use a 0% money transfer card. This type of card allows you to move funds from your credit card into your current account interest-free. You can then use these funds to pay off your overdraft.

Tesco Bank, for example, offers up to 33 months’ interest-free on money transfers made in the first 90 days, although you may be offered 0% for 27 or 21 months, depending on your individual circumstances.

Note that you’ll have to pay a fee of 3.94% on transfers made in the first 90 days, and once the introductory period ends, you’ll pay 21.814% to 30.467% pa (variable) depending on your circumstances, and a 3.99% fee.

The card has a representative rate of 18.9% APR (variable)*****.

Personal loans

If you took out a personal loan to help fund your summer adventures, check what rate of interest you’re earning. If it’s particularly high, it might be worth switching to a better deal to reduce the amount of interest you pay. But do consider this carefully before making a decision.

Sainsbury’s Bank, for example, offers 2.7% APR representative on borrowing of between £7,500 and £15,000, over one to three years. Be aware you’ll need a Nectar card to qualify.

Before you switch, be sure to check whether you’ll be charged a penalty for getting out of your existing deal early and whether that’s worth paying in order to benefit from a lower rate of interest.

All credit cards and overdrafts are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.

MoneySuperMarket is a credit broker - this means we'll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a commission by the lenders - though the size of that payment doesn't affect how we show products to customers.


*Representative Example: If you spend £1,200 at a purchase interest rate of 19.95% pa (variable), your representative rate will be 19.9% APR (variable).

**Representative Example: If you spend £1,200 at a purchase rate of 6.45% pa (variable), your representative APR is 6.4% APR (variable).

*** If you use an arranged overdraft of £1,200 the amount you will be charged is 50p per day (variable).

****Representative Example: 0% EAR variable on the first £250. 15.9% EAR variable on anything above £250 (assumed overdraft £1,200).

*****Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% pa (variable), your representative rate will be 18.9% APR (variable).

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