Holidaymakers to spend £420 on credit cards this summer
UK holidaymakers are expected to spend £420 each on credit cards while on holiday this summer.
Some 14.3 million people will spend £6 billion, 10% more than in 2012, according to research from Post Office Money.
A quarter of these holidaymakers plan to use their cards to top-up their spending money, and 18% say they expect to run out of money and will rely on 'precautionary plastic'.
According to the report, a fifth of card users don't check the cost of using plastic overseas.
Be aware of charges
John Willcock, head of credit cards at Post Office Money, said "It is essential that anyone planning on using a credit card abroad is fully aware of how much they will be charged."
If you're planning to use your card abroad, Moneywise recommends the Everyday Card from Creation Financial Services, which has no charges for spending or withdrawing cash abroad, and a 12.9% APR.
Other top overseas-spending cards are the Halifax Clarity Card, which also has no charges for withdrawals or spending abroad, and has an 18.9% APR. If you're a Haliax current account holder, you may also receive £5 cashback a month.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.
by: Hannah Nemeth
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