What’s the best way to finance your next European holiday? 

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Team MONEYME|23 May 2023| 3-minute read

Longing for summer nights on the Seine, but don’t have the savings? If there’s a trip that you simply can’t miss, should you pop it on your credit card, or is it better to take out a personal loan? 

Here’s how to figure out which is the way to go. 

Eyeing off interest rates 👀 

When choosing which option is best to finance your holiday, consider these two key things: 1) how much you will need to borrow and 2) how long you will need to pay it off. 

Credit cards often offer an interest-free period (like our Freestyle card). After the interest-free period you pay interest on your balance, ie how much of your credit limit you’re using.  

A personal loan doesn’t offer an interest free period. However, the interest rate is often much lower than for a credit card. This means you might end up paying less in interest over time, especially if it will take you a while to pay it back.  

So, if you’re borrowing a larger amount – say, a few grand to pay for flights and accommodation – a personal loan may be the cheaper option. If you are making the bookings in advance, it’s also easy to estimate how much you’ll need.  

If you need a smaller amount – maybe some extra cash to help you cover small or unexpected expenses (like that extra cocktail or concert tickets) – and know you can pay it off quickly, then using a credit card might be the better option.  

The trick is to think long term. Estimate how long (realistically!) you’ll need to repay the total amount you’ll borrow. Then, work out how much interest you’ll pay altogether – for a credit card and a personal loan – and go with the better deal. 

Smashing your budget 💥 

Key to mastering your money is getting good at budgeting.  

Personal loans can make budgeting easier if you need to borrow a larger amount. To start, you’ll borrow a lump sum. So, you’ll know, from the get-go, exactly how much you’ll have to repay and by when. Plus, your loan will come with a repayment schedule, which will let you plan. 

Scored a windfall? If your personal loan has no exit fees, like ours, you can get one step ahead of budget and repay it sooner–without being punished. 

Staying friends with your credit score 👯

Whenever you apply for credit – whether that’s a credit card or personal loan – it’s a good idea to check your credit score first. Lenders look at your score to help them decide if you’re a responsible borrower and they should lend you money. 

You can check your credit score for free on the MONEYME app without impacting your score. Our credit score tool also tells you how likely you are to be approved, so you can decide whether it’s a good time for you to apply. 

If you have a good credit score and you apply for a MONEYME personal loan or credit card, you’ll also likely be rewarded with a lower interest rate. 

The verdict 🥇 

A credit card and personal loan can both be great options to give your holiday finances a boost before a big trip.  

The key is to work out how much you need to borrow, how long you’ll take to pay it back, and then what interest rate you’ll likely have pay for each. 

If you only need a small amount that you’ll be able to pay off quickly within the interest-free period on your credit card, then a credit card is probably the way to go.  

However, if you’re borrowing more for flights and accommodation and you’ll need longer to repay what you borrow, then a personal loan will generally come out on top. It often comes with a lower interest rate and helps with budgeting longer term. 

Bon Voyage! You’ll be sipping champagne on the Seine before you know it.