Summer is the peak travel season for Indian families, and travel costs such as airfares, hotels, Insurance, and visa fees can be more expensive than usual. Credit Cards are a convenient option. However, they have disadvantages, such as high interest rates and potential debt accumulation.

Personal Loans for Travel are Unsecured Loans. This means they do not require you to pledge any asset, such as a house or a car, as collateral to get the funds you need. Instead, the lending institution approves these Loans based on factors such as age, credit score, income, etc. The primary advantage is that you can use them for multiple purposes, such as vacations, higher education, funding unexpected emergencies, weddings, etc.

Benefits of Personal Loans over Credit Cards

You can use a Personal Travel Loan to finance all your travel expenses, including airfare, hotel costs, purchasing travel equipment and accessories, and even a tour package. Depending on your eligibility, they typically come with quick approvals and loan disbursements. Here are ways they are beneficial over Credit Cards:

Potentially lower interest rates

Compared to Credit Cards, Personal Loan interest rates are generally lower, especially for borrowers with a good credit history who meet the eligibility criteria. It can significantly reduce the overall Loan costs for the summer vacation.

Larger Loan amounts

Personal Loans also typically offer larger Loan amounts than Credit Card limits, so you can comfortably meet all your expenses. For instance, lenders offer Loan amounts of up to Rs. 30 lakh. A fixed Loan amount also removes the risk of overspending, which is associated with Credit Cards.

Predictable fixed payments

Personal Loans have fixed repayment terms. Borrowers know how much they must repay each month. Online tools, such as an EMI calculator, provide a realistic estimate of the monthly payments you can expect. This makes adjusting your budget and planning for timely Travel Loan payments easier without straining your finances.

Why is paying for your vacation with a Credit Card a bad idea?

There are several reasons why using your Credit Card to pay for your summer vacation can be disadvantageous:

• High interest rates

Credit Cards include high interest rates, especially if you carry a balance. This increases the overall cost of your trip.

• Impact on credit scores

Maintaining a lower credit utilisation ratio (ideally 30% or below) is important for a strong credit score. Vacations can significantly consume your available credit, potentially harming your credit score.

• Debt accumulation

Relying on Credit Cards for summer vacation expenses leads to debt accumulation if you cannot pay off the balance in full and on time. This strains your finances and impacts your overall financial well-being.

Conclusion

Personal Loans offer a practical and advantageous alternative to Credit Cards when funding your last-minute summer vacation. They let you enjoy lower interest rates, quick disbursements, and predictable fixed payments, making it easier to budget your travel expenses.