Planning a holiday is an exciting time, but booking hotels, accommodation and flights can get pricey.
You might consider paying for your holiday on a credit card, but it’s a decision you should think about carefully before you take the plunge.
Paying for your holiday using a credit card could be an option if you want to spread the cost over a few months, rather than paying in one go.
You could use your credit card to pay for flights, accommodation, insurance, and use it for spending money. However, there might be more suitable options for borrowing spending money, such as a prepaid travel card. It's also important to keep in mind that you should only use your credit card when you have the ability to pay it off before the 0% interest period ends.
If saving isn’t an option for you right now, a credit card could help you pay for your holiday.
You may find cheap flights and accommodation by booking in advance, and you’ll be covered by Section 75 under credit card protection.
Before you start packing your swimsuit though, check your credit limit to make sure your card covers the cost of your holiday, and that you can make the monthly repayments too. There could potentially be an overseas charged linked to your credit card so read the small print before using the card.
Depending on where you’re flying from, your flights could be expensive, so it might be worth buying your tickets on your credit card. Just bear in mind that you might have to pay an extra fee for paying this way.
Under Section 75, as long as the price of each individual ticket is between £100 and £30,000, you might be able to get your money back from your credit card provider if your flights are cancelled or the airline goes bust. You could even be covered for alternative flights and accommodation, if your flight is rescheduled.
If you’re denied a refund from the airline, contact your credit card provider who should be able to help you further.
Some credit cards will give you air miles or other rewards for flights you book on your credit card, so if you’re a regular traveller, this could be worth looking into.
You’ll need to check whether your accommodation provider accepts credit cards before you book, and be aware of any fees for credit card bookings.
If you’re booking a villa with a group of friends or family, keep in mind that getting a refund could be a little more tricky as it may only be booked in one person’s name. You’ll need to make sure that if you do receive a refund, the lead traveller redistributes the money fairly to everyone else.
Using a credit card abroad could be costly if you’re charged overseas fees, and if you withdraw money at a cash machine.
It might be cheaper to exchange your money before you set off and use cash as spending money while you’re away, to avoid paying more than you need to. You might also need cash if you’re paying in small establishments that don’t have card machines.
Section 75 of the Consumer Credit Act can give you more protection than a debit card, when it comes to getting a refund for your holiday – if you spent between £100 to £30,000.
When you use a credit card, your provider is jointly responsible for your purchase along with the seller.
That means that if you need a refund, the credit card provider has a duty to ensure that you’re paid what you’re owed.
If your holiday is cancelled and you can’t get a refund from the holiday company, contacting your credit card provider should be your next port of call.
It’s always a good idea to weigh up the pros and cons of booking your holiday with a credit card, to decide whether it’s the right choice for you.
Here are some things to think about:
If you use your credit card to pay for your holiday, Section 75 can cover you for:
To be covered for your holiday, flights or accommodation, you’ll need to have booked directly with the airline or provider. Package holidays are protected under the ABTA and ATOL schemes instead.
Your credit card provider can help you to get your money back if the company you booked your holiday, flights, or accommodation with refuses to refund you.
Contact the original company you bought the tickets from, and follow their refund process.
If they don’t give you your money back, get in touch with your credit card provider and tell them you’re seeking a refund under Section 75. They’ll then help you to get the money rightfully returned to you.
You’re entitled to go to the Financial Ombudsman if you don’t receive a satisfactory response from your credit card provider, who will work on your behalf to get a refund.
If you have some disposable income each month, you could save for a holiday, which could be the cheapest option as there typically won’t be any fees attached.
You could take out a loan to pay for your holiday, but again, you’ll need to check the interest rate and make sure you can cover the monthly repayments. Whatever you do, don’t be tempted to take out a payday loan to cover the cost of your holiday as you could end up in a lot of debt.
Alternatively, the holiday provider themselves may offer a payment plan which could work out cheaper than both a credit card or a loan.
It’s best to look at all of your options, before you make a decision.