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Paying for a holiday is something that you should really think about, especially if you’re looking for a way to reduce stress. Many people enjoy having a holiday and find that it has a significant impact on them and their stress levels as well as giving them valuable family time. However, they can be expensive and we have to find the money to pay for them. This is not always easy and some people will choose to borrow the money in order to pay for it. This could be by various means but credit card is something that many people choose to use both to pay for the holiday but also to spend on when they are there.
Costs of a credit card
A credit card can be an extremely convenient way to pay for things. However, it can be expensive and it is worth understanding how it works so that you are aware of how to calculate the costs. A credit card costs nothing to use if you repay the full outstanding balance when the bill arrives. You will be given a date when you have to repay the full amount before interest is charged. However, if you do not repay it in full you will be charged interest and the bill will tell you how much this will be. You will have to repay this interest and you may also need to repay a small amount of what you owe in what is called the minimum repayment. The following month the same will happen. As you repay the interest each month you may find that it is difficult to work out exactly how much interest you are paying. It may feel like it is really cheap because you are paying off that interest each month. However, if you note down how much you are paying and add it up, you will start to see how much it is actually costing you.
If you use the card to draw out cash for your holiday, particularly if you are abroad then there will be a large fee associated with this. You will normally start being charged interest on that money as soon as you withdraw it and so it can be considerably dearer.
Repaying the card
As you are not forced to repay much of the card each month the debt can hang on and on. You could find that you never clear the debt if you keep using the card and spending on it and then only repaying the minimum. It is wiser to repay the card in full every time that you get a bill. However, if you want to use it to pay for a holiday then you may find that you do not have enough money to cover the costs of it. Therefore, you may not be able to repay it in full and you will have to pay interest on the outstanding balance. It could mean that you spend all of the time until your next holiday or even longer trying to repay the debt.
Consequences of using a card
Credit cards are expensive ways to borrow and so it will be costly to use a card to pay for the holiday. With no structured repayment schedule, you may find that it takes a very long time to repay and so the debt will hang around for a long time. You may find that the stress of the debt could mean that any relaxation gained by the holiday is soon outweighed by the stress of the debt.
It could be that you will be better off saving up for the holiday and waiting to go so that you have no debt stress when you return. You may also find that if you choose an alternative way of borrowing with a regular repayment schedule you will be able to get it paid back more quickly and this should be helpful as well. It is therefore worth thinking hard about whether you want to borrow and how much you want to borrow so that you can decide whether it is worth doing this for a holiday.
It can be easy to think that a holiday will be well worth it especially if you are taking family members that will find it fun and not be affected by the debt. However, if you can get into the habit of saving up then you will not have to worry about debt when you go on holiday. Maybe if you miss a holiday for one year, you will have time to repay any debt you have as a result of previous holidays and save up for the next one. You might even begin to find saving up like this fun and choose to do it for other purchases as well. You will then find that buying things is significantly cheaper compared with borrowing money to buy them.