Did you overspend on your summer holiday? You are not alone if you did.
Thousands of Britons end up with a debt hangover from their summer trips, which cost them on average £974, according to recent research from Sainsbury’s Bank.
Its findings also revealed that Britons typically put 23% of their total summer holiday spend on a credit card.
Simon Ranson, head of banking at Sainsbury’s Bank, said: “The true cost of a holiday is much greater than just the average upfront cost of booking it in the first place, which is just £342.”
Having that debt hanging over your head can be costly – and stressful. So follow our top tips to paying off your holiday spending as quickly and cheaply as possible.
*Make it easier on yourself
You can make life easier and reduce the amount you pay in interest by consolidating any credit card debts on to one single card, preferably one offering 0% on balance transfers. Use comparison websites to find the best deals – cards offering long 0% balance transfer periods at the moment include the MBNA Platinum card and the Halifax Balance Transfer card.
*Check before applying for a 0% card
Take advantage of the online tools designed to help you work out which cards you are likely to qualify as a customer. There’s no point applying for lots of cards you are unlikely to get; as declined applications can damage your credit score, making you more likely to be refused in the future. Here is a useful online tool from Money Saving Expert:
*Pay off as much as you can
Credit card companies allow customers to pay off as little as a few pounds each month. But it will take you years to pay down your summer holiday debt if you only make the minimum payment each month. So pay off as much as you can afford every month. That way, your debts will go down more quickly and will also cost you less if you are paying interest on them.
*Don’t ignore your overdraft
If you have slipped into your overdraft due to your holiday spending, it’s worth checking how much you are being charged. Most banks charge double-digit interest, while you may also face hefty penalty charges if you go overdrawn without permission. If you have an expensive overdraft, you could make big savings by switching your current account. Nationwide’s FlexDirect account, for example, offers new customers a free overdraft facility for the first 12 months. Alternatively, use a money transfer credit card, such as Virgin Money’s 0% balance transfer card, that allows you to transfer money into your account and pay the debt off on the card, interest free.
*Seek help if you need it
If your debts are really getting on top of you, it may also be worth talking to a debt charity such as the Debt Advice Foundation. It offers free advice and can help you set up a free debt management plan if necessary. This debt solution, which generally involves the interest charges on your debts being frozen while you pay them off at a manageable rate, will be noted on your credit file. But it will have less of a negative impact than you missing your monthly debt payments.
This article was written by Jessica Bown