How to pay for your summer holiday
Forget the snow - it's time to think about getting a bit of sun this year. And how to pay for it...
It's been a hell of a shock coming back to the office after my honeymoon. Snow, rain, ice - funnily enough, there's not a lot of that in Antigua at the moment, so my thoughts have already switched to where to get some sun this summer.
And just as importantly, how am I going to pay for it?
Get a great deal
The first task, and it's a pretty essential one, is to make sure I get a good deal on the holiday itself. That means properly shopping around, taking advantage of secret hotel deals and avoiding paying more for your flights than you need to. It's very easy to get a bit lazy and go for the first decent looking offer, but it's really worth it to put in a bit of work to ensure you get the cheapest possible deal.
For a fantastic range of hints and tips on how to do just that, be sure to check out our goal: Have a cheap holiday.
While finding the perfect holiday is a mission in itself, ensuring that you pay for it in the most efficient fashion possible is even more important in my view.
So what are your options?
Always use a credit card
Whenever you make a purchase of the size of a holiday, there is only one way you should ever pay - on a credit card. This is thanks to the brilliant cover that you get as a result of Section 75 of the Consumer Credit Act.
Basically, if you spend more than £100 on a single purchase, using your credit card means that the card provider is equally liable to refund you should anything go wrong. And with airlines hitting the wall at a rate of knots, you can't afford to gamble!
For more on Section 75, have a read of Don't be fobbed off by your credit card company.
The best purchasing cards
So if you want to pay for a holiday, what are the best purchase credit cards around at the moment? You'll want a card with a nice long 0% interest period, so you can stretch out those payments as much as possible.
The best card in the market in this respect is on offer from Tesco, offering a whopping 12 whole months of interest-free credit on purchases. However, if you tend to do your shopping at Sainsbury's you might prefer to go for their own credit card.
Ok, you only get 10 months of 0% interest, but you do get double nectar points on your grocery shopping for two whole years! For more on the brilliant Sainsbury's card, why not check out The top new all-round credit card.
Time to transfer that balance
However, if you really want to get your monthly payments as low as possible, it may cost you less to pay for the holiday on your existing card, but then move that debt over to a new balance transfer card, as you'll get even longer to pay it off.
The top balance transfer card - and it has been for absolutely ages - is of course the Virgin Money Credit Card, offering an almighty 16 months of 0% interest on balance transfers.
So if you paid £2,000 for a big holiday on the Sainsbury's card, and wanted to pay it off before you start getting whacked with interest, you'll need to pay £166.67 each month.
However, why not make that purchase on your existing card, and transfer it over to the Virgin card? You'll have to pay a 3% transfer fee (so £59.60 in this case), but even with that added on, to pay off that debt over the 16 months you'll only have to pay £128.73 each month.
So you'll pay a little more in the long run but less on a monthly basis.
However, remember that as the Virgin card is handled by MBNA, you won't be able to transfer a balance from a fellow MBNA-issued card. Find out more.
If you're in this situation then the next best 0% balance transfer card is the Santander card, offering a very respectable 15 months. Again, a 3% balance transfer fee applies.
Pay it off over a lifetime!
If the holiday you are planning really is a once in a lifetime trip and is costing you a bomb, it might take you a bit longer to pay it off than the year and a bit afforded by the best 0% balance transfer cards.
In this instance, you would do well to pay for the holiday and then transfer your balance to the Barclaycard Simplicity card, which offers a fixed rate for life of 6.8% APR on balance transfers. It's an absolutely brilliant bit of plastic for paying off a large debt over a longer period.
Apply before you buy
If you're planning to buy your holiday on one card and then transfer your debt, it's best to apply for the card first, and wait to see if your application has been approved, before you buy your holiday. You'll have plenty of time after you get the card to make the transfer - most cards allow you at least 60 days to do so, from the day your card is issued.
If you do it in this order, you won't get stuck with the debt on an expensive card if your application is turned down for any reason. If you are rejected, check your credit rating before you apply again and correct any errors.
What about your holiday money?
Like the professional that I am, I even did a bit of work research on my honeymoon, giving a pre-paid currency card - the CaxtonFX Global Traveller card - a test with some of our spending money. And it was fantastic.
I'm a fan of pre-paid cards in general (watch this video to find out why), but what I like about this card in particular is how flexible it is. I load it up with sterling, and then if I make a withdrawal overseas, I can get my hands on whatever the local currency is, at that day's exact exchange rate. Now that is pretty clever.
Even better, when you take money out from an ATM overseas, there's no charge - a feature a number of other cards don't offer.
It's worth noting however, that the majority of firms offering prepaid currency cards only offer them in very limited currencies - normally just Euros and US Dollars. Travelex offers the widest range, with seven different currencies covered, but my CaxtonFX card is a great 'catch-all' option I reckon, particularly if you are likely to head somewhere with a more unusual currency.
For a full run-down on your best holiday money options, be sure to have a read of The best way to get your foreign currency!
More holiday tips
If you fancy putting aside a few quid to cover the costs of jetting off, there are a stack of ways lovemoney.com can help!
First of all, why not try some of the tips in our goal: Build up your savings
Next, check out this video: The best way to get your holiday cash
Finally, if you have any holiday related queries that still need answering, why not see if your fellow lovemoney.com users can shed light on the issue in our Q&A section?