Congrats! YOU DID IT! Whatever “it” is, you deserve to celebrate! We know many people (especially us) love to take vacations to explore the world. There are many different ways to finance a trip, so we thought we would share some of the ins and outs to help you with your decision!
One way to pay for your big trip is to take out a personal loan through a local financial institution. These loans often have interest rates that are lower than credit cards, and you can borrow precisely the amount you need. However, be aware that payments often will begin right away. Before you take out this type of loan, be sure you understand when payments will be due, how much they will be, and how many you will have.
Another option is to consider financing a trip with a credit card. However, before you jump the gun on swiping your card or plugging it into the chip reader, do your research. Find out your interest rate, your credit limit, and if you will be able to pay off the trip in a reasonable amount of time. Having a large balance on your credit card can negatively impact your credit score, so be sure to fully understand the implications. For example, if you charge $1,000 on your credit card with an interest rate of 10% and make the minimum payment of $20 each month, it would take 65 months (over 5 years) to pay it off. If you I pay $100 per month, the balance would be paid off in 11 months!
We saved the best option for last! While we know that sometimes our hearts just yearn to travel, we also suggest being patient if you’re not able to afford some of your trip with money you have saved. Creating an additional financial burden can be extremely stressful, psychologically and financially. Saving can also give you time for thorough research on how to make the most of your trip. For example, if you save $100 a month, you could make a significant payment toward your trip in just one year. Your getaway might be delayed while you save, but you will thank yourself in the end!
We hope that this has helped broaden your ideas on how you might afford your celebratory hoorah. Whatever you decide, make sure it is right by you!