Booking Vacations – Should You Use Your Credit Card?

(Guest Post by Shay)

One of the things that UK credit card users find so handy about plastic is that it can be used to spread out the costs of a large purchase, such as a holiday for example. A summer break can cost hundreds of pounds, which is a lump sum that you might not have all at once in your current account. To afford your holiday then, you must either dip into your savings or use a credit card – but which is best?

If you’re dreaming about escaping somewhere hot and sunny, and are considering using your credit card to pay for your perfect holiday, read on to see the pros and cons of this particular payment method.

Pros

There are a few benefits to be had when you pay for a large purchase like a holiday on your credit card, for example:

• Spread out the cost into manageable amounts. Rather than stretching your finances by paying for your holiday outright, credit cards allow you to gradually pay for it over a number of months. This can make it much more affordable.

• Protection on spending. Credit cards offer enhanced purchase protection for anything you buy that costs over £100. Under the terms of Section 75 of the Consumer Credit Act, the credit card issuer is equally liable for purchases costing up to £30,000 if something goes wrong. So, if your holiday company goes bust and you don’t have adequate travel insurance cover, you will still be able to claim back all of your money. This even applies when you pay the deposit using your credit card and the rest in cash.

• Cashback and rewards. When you compare credit cards, you’ll see that some offer cashback and rewards on spending. This means that you could earn something extra when you pay for your holiday using a credit card.

Cons

As well as the benefits of paying for a holiday with your credit card, you should think about the drawbacks too, such as:

• Interest. Although you can use credit cards to spread out the cost of your holiday, you will still have to pay off what you owe when you get back from your travels. If you can’t clear your balance in full each month, you could be subject to interest payments which could even leave you in debt.

• Fees and charges. Some companies charge a fee for processing payments made on credit cards, although excessive charges will be banned from April 2013. You need to factor in the extra cost of paying by credit card when thinking about any rewards or cashback you might get.

Team Dinks