'Travel now. Pay later.' It’s not common advice, but there are good reasons to pay for your holiday with a credit card or personal loan. Let’s look at why you might stagger the expense of a break over a longer period of time.

Give me the main points

  • Family events don’t always happen when we’re ready – or have the funds.
  • Travel operators sometimes offer ‘deals of the century’ – but only for a limited time.
  • We offer complimentary travel insurance on some of our credit cards if you pay for your tickets/accommodation with them.
  • Be disciplined and don’t over-spend. You don’t want the gloss taken off your holiday.

More Australians are travelling overseas than ever before. In 2013, 8.4 million of us ventured abroad, three times the number of a decade ago.

The Aussie dollar’s strength, cut-throat competition between airlines, and the increasing ease of internet research (and bookings) means that trip of a lifetime is often just a few clicks away.

It’s not only overseas: we’re holidaying within Australia more than ever, too, seduced by the beauty of our own land (and the excellence of Tourism Australia’s 'There’s nothing like Australia' campaign).

But sometimes our holidays come around sooner than we’ve saved for. There are good reasons to pay for your holiday with a credit card or personal loan. Let’s look at why you might spread the cost of a break over time.

Four reasons to take that holiday when you need it

  1. It’s argued we’re working harder and longer than ever before. For the sake of our happiness—our motivation, our wellbeing, our sanity—we need time off. We need a break. And a loan—or sensible use of your credit card—gives you the flexibility to do just that.
  2. Family events don’t always occur when you’re ready. Whether it’s a wedding, a graduation, an anniversary, a significant birthday—or even a family crisis—you want to be there. You need to be there.
  3. Sometimes airlines and travel companies offer deals and specials that are too good to miss. You may be able to travel for longer, or to destinations you’d just dreamed of—but only if you travel sooner than you’d intended.
  4. We offer complimentary travel insurance on some cards if you buy your tickets and accommodation with your credit card.

All these are compelling reasons to have a holiday when you need it, instead of when you can pay for it up front. Just keep in mind that you will still be paying off your holiday once you get home.

How to manage your holiday debt

It’s easy to get carried away while you’re on holiday and spend more than you meant to. That Louis Vuitton handbag, the room upgrade; that fake Rolex that seemed such a steal at the time. Your happy memories and post-holiday excitement will fade even faster than your tan if you spend too much while you’re away.

You want to keep your debt to a manageable level so you can start planning the next trip. Here are some things to consider.

  1. Set yourself a budget while you’re on holiday. Give yourself a daily spending limit—and stick to it.
  2. Keep exchange rates in mind. And factor in charges for overseas cash withdrawals and conversion fees.
  3. Use your savings in conjunction with your credit card or a loan. That way you can travel but keep your debt levels to a minimum.
  4. Once you’re home, consider how you could pay down more than your minimum monthly payment on your credit card (or loan). Even $20 per month can help reduce the interest monthly payment on your credit card (or loans).

Our personal finances are more complex—and yet more flexible—than they were even 20 years ago. Because of this there are more financial options out there. Use these to your advantage—and enjoy that break!

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