You’ve been planning nonstop for the trip of your dreams, but your funds still aren’t enough to cover everything – from your flight ticket to your souvenir shopping. So you think of taking a loan to fill the holes of your travel funds.
But the question is, is it worth getting into debt while traveling?
The answer is, it depends. If it’s good debt, i.e. you have enough financial resources to support the repayment of the loan, then yes it’s worth it. Otherwise, considering the alternatives might be a smarter move for you.
There are also other factors and situations to consider, which we’ll discuss further in this post. If you’re planning to take out a personal loan, stick around till the end to find out if a loan is the best choice for you!
Credit Cards and Personal Loans: Which is Better?
A traveler has two options to finance his/her travel if savings aren’t enough to cover everything: use credit cards or take out a loan.
Some travelers choose to stick with credit cards because of the purchase protection it carries. You also earn reward points, which you can use to redeem rewards offered by your provider.
On the not-so-bright side, your spending is limited to your credit card limit. It’s good if you have a high limit, but if not, then you’ll need on-hand money to secure your other expenses during the trip.
Some choose to take out a loan instead mainly for its lower interest. While there are no protections included, you can get your money upfront (or a few days after approval), so you can pay and purchase stuff immediately.
If you want to take advantage of both credit card and loan though, you can use credit cards to finance your travel and take out a loan to repay your credit card debt or cover your expenses at home.
If you’re trying out this approach, make sure to apply for a loan before your travel date! You don’t want to feel confident that your loan will cover all your expenses or debt, only to know that your lender or bank approved only half of your expected amount.
But still, which weighs over the other? Again, it depends on your situation and preferences. If you prefer the extra protection and benefits and don’t mind paying the higher interest, then go for credit cards. If interests scare you, a personal loan might suit you better.
How to Avoid the Guilt of Being In Debt While Traveling
If you’re planning to take out a personal loan, like the ones offered by Cash Mart, think “don’t bite more than what you can chew.”
Before heading out to take a loan, analyze first your need to borrow money and your capability to repay your debt. Maybe you already have enough savings to cover your travel expenses? If that’s the case, it would be more ideal to use these instead of loaning or using your credit card. You’ll save yourself from the headache of interests!
If you estimate a good and steady flow of income in the upcoming months, then you have nothing to worry about when taking a loan. If your situation is the opposite, you might want to consider some alternatives to financing your trip.
You should also check your loan provider options. Banks and lenders offer different interest rates, each trying to provide lower rates than the others. But be wary of lower interest rates, because you might be in for a surprise with other charges and fees included in the loan. Do your research first!
It’s also ideal to consult with your family first before applying for a loan. If you’re the breadwinner of your family, check with your family first if you can maintain the financial support at home while repaying your debt.
If your bank or lender will require you a guarantor, you can ask any family member to be one for you. They’ll be willing to take the risk for you since you’re family!
Lastly, be smart with how you spend the money you borrowed. Make it a rule to take a loan to cover only the essential expenses. Other leisurely and impulsive expenses should be covered with your extra money (ideally from your savings).
When you take out a loan with this mindset, you won’t be tempted to borrow a huge sum of money. Therefore, you can manage your repayment responsibilities and be able to repay at the quickest time possible!