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What is the best way to finance a holiday?


Holidays and travelling give us some of the most enjoyable times we can have, but working out the best way to afford them can be tricky.

To help you, we’ve explored 5 ways you can finance a holiday, including some pro’s and con’s you may not have thought of, but should really consider.

So here’s our list, starting with what we believe to be the best financial option to fund your travels and finishing with the ones you should approach with caution.

1. Saving for a holiday

If you can, saving for your trip is the least expensive way and always your best option.


  • As you’re saving the money and not going into debt, there are no interest charges or fees so it’s the cheapest way to fund a holiday.

  • Once your holiday is over, you won’t have any debt hangover and can start saving for your next adventure.


  • Saving money requires forward planning, commitment and enough time to save the amount you need to travel. If it’s short notice, saving enough can be hard or even impossible to achieve.

  • Many people have good intentions to save, but often unexpected expenses can mean the savings are stopped, or worse, dipped into. Consequently if you don’t have the amount you need, you will need to look at other alternatives to pay for your holiday.

2. Take out a holiday loan (sometimes called a travel loan.)

A holiday loan is designed to be used specifically for travel and holiday expenses.

At Fair Go Finance applying for a holiday loan is easy and completely online, so you can be given your answer and the money (if approved) potentially within a day.

Here are the pro’s and con’s, specifically related to our holiday loans.


  • They are structured to ensure they are affordable, but repaid as quickly as possible for you.

  • They are generally fixed rate loans, so you know your repayments won’t change and can budget easily around them.

  • They are quick and easy to apply for.

  • They have a start and finish date, unlike a credit card which can be hard to repay.

  • If you repay it on time and as per your agreement, you will establish a good repayment history. This will help if you want to borrow again and at Fair Go Finance you will also receive loyalty rewards whenever you return for another personal loan.

  • At Fair Go Finance, holiday loans are available for people with different credit ratings, such as good, OK and bad credit.

  • A travel loan can’t get lost or stolen, unlike a credit card.

  • If you apply early enough, and use it to pay for all your accommodation, flights etc, you could actually repay it before your holiday begins!

  • You can repay it early, with no penalties or extra fees.


  • They do have costs, such as an establishment fee and either interest charges or fees. Fortunately the establishment fee is funded as part of the loan, so you don’t need to pay any of the costs upfront.

3. Pay for your holiday using a credit card

Credit cards are chosen because they are considered flexible to use when you are on holiday.


  • Some offer points and reward programs and interest free periods.


  • Generally, if you don’t clear the entire statement balance when it’s due, you will incur interest charges. This means each month, you will end up paying interest on interest and potentially struggle to ever repay the entire holiday debt.

  • It’s possible to max it out with other expenses so you are not able to travel as much as you’d originally hoped.

  • It can get lost or stolen and can be frustrating to replace, especially if your overseas.

  • You can be charged a surcharge when paying for items on your credit card.

  • Some have an annual fee attached, so you will be paying it every single year and this could add up to hundreds and even thousands if you keep if forever!

  • If you want to take cash out, then you will get charged a cash advance fee.

4. Increase your mortgage or redraw any surplus from it

Many banks and mortgage providers will allow you to redraw any surplus you have, or increase your mortgage limit if you complete an application and are approved.


  • The interest charges on mortgages are lower than credit cards or personal loans.


  • By adding it to your housing loan, you effectively will be spreading this holiday loan over the mortgage term, paying interest on your trip for up to 30 years.

5. Borrow from family or friends

Borrowing money from friends or family for a holiday is something we recommend you try to avoid.

They may lend you the funds interest free which sounds great, or even at a very low cost, but there are a number of con’s attached to this option, outlined below.


  • As mentioned above, the agreement may be cheaper with no fees and/or very small interest changed.


  • The person you borrow from, may suddenly need the money back. This can’t happen with a loan, as you sign a contract.

  • As you don’t tend to sign a legal contract with them, it could lead to arguments about the repayment agreement and terms.

  • If anything does go wrong, or arguments arise, you are at risk of damaging your relationship with them.

Our final tips on when choosing the best way to finance your holiday

We hope the above information has helped with your holiday finance decision. Here are four final tips we recommend you always consider too!

  1. What’s your credit rating like? If it’s good you should be eligible to apply for any type of personal loan, credit card or housing loan increase. If it’s bad, you will need to do your research on who offers bad credit loans.

  2. How quickly do you need the funds to pay for your holiday? This may rule out being about to save or restructure on your mortgage.

  3. What happens if you want the option to repay it early? Just make sure there are no early repayment costs or fees associated. (If you take out a personal loan with Fair Go Finance we welcome you to repay your loan early with absolutely no costs.)

  4. How much will it cost you? For any loan, credit card or loan from family or friends, make sure you always get confirmation of everything in writing.

If you’d like more information on why a holiday loan is a better option than using a credit card, you’re welcome to read our blog “why choose a personal loan rather than a credit card?”.

Safe travels!