Most consumers now choose to pay for their holiday by credit card rather than from savings or instalments.
Research carried out by the Halifax has found that 56 per cent of those surveyed now pay for their holiday by credit card. 30 per cent paid up front by using savings, with another 6 per cent paying in instalments via direct debit.
However, for most paying by credit card it isn’t to spread the cost, as the vast majority stated that they pay off the credit card balance before they leave on their trip.
The main reason given for using a credit card to book holidays was to receive protection by Section 75 of the Consumer Credit Act, whereby the credit card provider takes on some of the responsibility should the supplier breach its contract.
Other reasons could be additional benefits offered by credit cards, such as cashback offered on spending which can be as much as 5 per cent if you choose the right card. Other cards can offer Avios (air miles) or reward points for spending on the card.
If using a card for rewards, it is important to make sure that the balance is paid off in full to avoid interest charges.
Other cards offer interest-free periods so that you can spread the cost of your holiday over monthly instalments, though it is important to ensure that you pay the balance off reasonably quickly, as you don’t want to still be paying for last year?s holiday when going on your next one.
Jon Roberts, director of cards at Halifax, commented: ‘For the majority of holidaymakers, credit cards have become an indispensable method of payment, rather than a way of borrowing for a longer period of time. Credit cards don’t have to be more expensive if paid off in good time, and some can even save considerable amounts if you choose the best credit cards for travel abroad, compared to more costly ways to get access to foreign currency.’
He continued: ‘With the number of trips we make overseas up 8 per cent in the last year, getting a good deal matters. Holidaymakers should shop around for the best deals – considering the best credit cards for their travel plans in a similar way to how they might shop around for the best hotel deals, or minimise overseas fees for other services like data roaming. Meanwhile, the minority who do need to spread their holiday costs for longer, beyond their return, should also consider a card with an initial interest-free period, if they can make sure they pay back the balance before this ends.’