How to finance your dream vacation?

A vacation, though rejuvenating, can burn a hole in your pocket, especially when you are not financially prepared for it. Therefore, most people either cancel or postpone their long dream of vacations. However, here are some options that can come to your rescue to make travel expenses easier on your pockets, even when one falls short of funds. These may range from short-term personal loans to the right travel credit card. You can check your eligibility for such loans and credit cards, compare multiple options and apply online at third party websites like Read on to find out more about the different ways how you can finance your dream vacation.

Personal loan for Travel: Since a personal loan comes with no restrictions on where you can use your funds, you can conveniently use it for travel. It can be a suitable option to consider if you are planning an international vacation and require a higher loan amount. These loans are easy to apply, as they require minimal documentation such as identity proof, address proof and income proof. However, being unsecured credit, the interest rates on personal loans are on the higher side, starting from 10.49% p.a. and going as high as 25% p.a. or even higher in some cases. Moreover, it is easier to avail personal loans nowadays with pre-approved offers from several providers, especially if you have an excellent credit score.

Travel Credit Card: You can also consider applying for a travel credit card a few weeks before you travel. This will not only help you get access to funds but may also help you avail additional benefits like rewards on travel bookings, discounts and offers on partnered travel portals, travel memberships, complimentary lounge access, and a low forex markup fee. However, to maximize savings with these features, it is important to own the ‘right’ card with features that fit best with your travel requirements.

Amongst the numerous options available, you may find a card for domestic or international travel, railway or air travel, or even a card suitable for specific locations. If you have brand preferences, you may also find a co-branded credit card with popular travel portals or airlines. For instance, if you are planning an international trip, a card with complimentary international lounge access, a low forex markup fee, travel concierge and insurance cover can well fulfill your needs.

Utilize Travel Offers on Existing Cards: If you own a credit card, you already have access to immediate funds. In addition to the existing travel features, banks also run discount or cashback offers with popular travel portals, airlines, hotels, etc. For instance, Axis Bank has partnered with Cleartrip to offer benefits like discounts on domestic flight bookings, discounts on seat bookings etc. So, if you have an Axis Bank credit card, you can maximize savings by using the card on Cleartrip. By checking the ongoing offers and discounts, you can add to your savings.

Apart from applicable offers, you can also use your existing card for travel bookings by utilizing the accumulated reward points. Some card issuers also allow redemption of points for hotel and flight booking, against air miles or hotel loyalty programs, at their own designated portals, like HDFC Bank SmartBuy, Axis Bank EDGE Rewards, etc.

Additionally, your debit card can also fetch you such offers, especially during the vacation season, during peak summer and winter months. The key is to keep an eye on the ongoing and upcoming offers, before you plan a trip.

Loan on Credit Cards: If you are falling short of funds for your vacation, you can also avail a loan against your credit card to cover it. Though usually available at a comparatively high interest rate (than personal loans), it could be a wiser alternative than putting the entire amount on your card as the latter could lead to a debt spiral, if you are unable to pay off the entire amount on the due date. The loan you avail against your credit card is converted into EMIs which would be easier to pay off.

Using any of the ways mentioned above, you can easily fund your much-awaited dream vacation. However, understand that ultimately, these are ‘credit’ options that offer you extended funds beyond your means and need to be paid back on time. Therefore, you must ensure to keep your repayment ability in mind, before choosing to borrow an amount to fund a discretionary expense such as a vacation. After all, no experience is worth the cost of being debt-ridden.

Ensure responsible usage by avoiding over utilization or exhaustion of the credit limit and on-time payments by opting for EMIs that fit best with your monthly spends and earnings. Read the terms and conditions carefully before availing a personal loan or a loan against credit card.

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