What’s the Best Way to Pay for Summer Holiday?

Summer holiday provides a much-anticipated release from daily worries. These annual leisure outings furnish opportunities for families to leave behind work stress, school schedules, and other obligations around the house. The chance to get away from it all is treasured by Britons from all walks of life, but family holidays can lose their lustre, when financial concerns eclipse the relaxing nature of recreational travel, Fortunately for families on a budget, accounting for holiday costs and preparing the proper payment methods can lift the financial burden – ensuring trouble-free travel.

Travel Planning Includes Finance

Putting together travel abroad or holiday within the UK is a substantial undertaking. From accommodation to air travel needs, there are quite of few boxes to check whilst orchestrating enjoyable outings. Among the many concerns on your travel to-do list, working out how you’ll pay for it all is an important step toward a relaxing experience.

If you’re fortunate enough to put by money in advance, summer holiday spending can be managed out of pocket. But if you’re like most holidaymakers, you may need some outside help putting together financial backing for summer travel. Various flexible loans can help bridge the gap when you need cash fast without a long wait for approval. Even with imperfect credit, you may be able to find a suitable loan, matching your holiday finance needs.

After you’re fully funded, the next decision for you to make is which payment type should you use to conduct transactions whilst on holiday. Is your credit card the best method of payment? Or should you use your debit card to avoid running up your credit card balance? What about prepaid cards? Is it better to travel with a prepaid alternative, designated just for your holiday spending demands?

Work out the Maths

Convenience is something to consider when formulating your holiday spending plan, but working out the best deal is also worthwhile, freeing up extra holiday cash. When comparing various payment alternatives and calculating the cost of each method, you can’t afford to overlook hidden fees that drive up the cost of your holiday payments.

For example, before you turn to the debit card attached to your current account, consider the costs associated with this type of transaction, made abroad. Debit cards commonly charge user fees, including foreign transaction fees and currency conversion fees. In one example, a charge for €5 ends up costing the user 53p, but some debit cards penalise UK users abroad with even stiffer fees. Because fees vary across institutions, it’s important to check with your bank, before relying on this payment method.

It’s worth noting, credit card users are typically charged a lower percentage for each transaction. By comparison, using your credit card may be more cost efficient than pulling out your debit card at restaurants and retail shops while traveling abroad this summer.

Prepaid Alternatives

Prepaid foreign currency cards enable UK travelers to preload balances in the currency of their choice. Users pay fees for the convenience, including non-sterling exchange fees, which can be particularly high on some examples. Loading and renewal charges may also be attached, which push the true costs of using prepaid cards even higher.

In addition to fees and charges associated with prepaid alternatives, the cards typically offer poor exchange rates, which acts like another hidden fee for users. And unlike credit cards, prepaid versions cannot be used for car hire, as well as having prohibitions against buying petrol, in some cases. However, they are not fully without advantages. If your uni student is traveling independently, for example, mum and dad can track spending and top up the cards from home, as needed.

Taking everything into account, a credit card may be the most efficient way to conduct transactions while traveling abroad this summer, provided you have funds reserved to pay the balance upon returning home from holiday.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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