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AIBU?

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Original poster

What are the advantages of using a credit card to book holiday instead of savings?

37 replies

Sofiegiraffe · 10/03/2022 11:35

Please can someone explain this to me in simple terms (I'm a little sleep deprived).

We are looking at booking a holiday for August time. I suggested to OH that we save like mad between now and July to pay for it. He thinks we are better to use a credit card to book it and pay off the credit card each month instead, as we have more protection on the holiday if anything went wrong and it was cancelled etc.

Can someone explain to me in simple terms what the advantages are (if any) of using a credit card to book instead?

Thanks

OP posts:
Movinghouseatlast · 10/03/2022 11:37

You have protection if something goes wrong. I would never use cash for any purchase because of this.

AllOfUsAreDead · 10/03/2022 11:39

I agree with your husband. Credit card protects you better than your own money.

Original poster
Sofiegiraffe · 10/03/2022 11:39

Thanks. What exactly is the protection though? Sorry if I sound thick, I'm just very tired.

OP posts:
Original poster
Sofiegiraffe · 10/03/2022 11:40

Oh thank you! Cross posted

OP posts:
ReeseWitherfork · 10/03/2022 11:40

If there's a problem, the credit card company will cancel your charge and reclaim the money.

We booked a last minute holiday late Feb 2020 for the April. It got bumped initially, then the company went bust, then the administrators sent an email saying there was no money in the company so none of the customers would get any money back. We sent all the info to MasterCard and they refunded us. It was really simple.

But you can still save like mad, just make sure the transaction goes via a credit card.

feministqueen · 10/03/2022 11:41

Agree with the others for the reasons listed above but also....

If the credit card is 0% and you can pay monthly then why wouldn't you want the money in your bank?! Better in your pocket!

moonlight1705 · 10/03/2022 11:41

Section 75 of the Consumer Credit Act means that the credit card company will be as liable for refunding you as the retailer if the retailer should go bust or cancel it. This applies to deposits as well as fully paid up holidays which does not apply if you pay by debit card.

DropYourSword · 10/03/2022 11:42

Bizarrely, both of you are right!

I always buy flights etc on a credit card because you get more consumer protection BUT I wouldn't spend money on flights / holidays I'm unless I already had all the money I needed to pay it off immediately saved up.

bassackwards · 10/03/2022 11:42

If the supplier for example goes bust, breaches their contract with you or is fraudulent the credit card company can compensate you, and then they go after the supplier. I think that's the way it works!

ReeseWitherfork · 10/03/2022 11:44

@feministqueen

Agree with the others for the reasons listed above but also....

If the credit card is 0% and you can pay monthly then why wouldn't you want the money in your bank?! Better in your pocket!

The only thing I'd say about this is that it still isn't a great idea to put on a 0% interest credit card if there's any chance your finances might change and you lose your ability to push it back. Lots of these credit cards will have a high interest rate when the 0% ends so could get stung if you've not cleared it. You can keep transferring the balance but it's not always guaranteed you'll get approved at the same spending limit etc. if your income has changed. Just weigh up whether it's a risk worth having (with everything going on in the world!)
CraftyGin · 10/03/2022 11:44

Make sure it's a credit card and not a debit card.

ReeseWitherfork · 10/03/2022 11:44

The only thing I'd say about this is that it still isn't a great idea to put on a 0% interest credit card if there's any chance your finances might change and you lose your ability to push it back.
I mean PAY it back.

Original poster
Sofiegiraffe · 10/03/2022 11:45

Thanks all this makes sense now.

I've been accepted for a credit card that has 0% on purchases for 20 months, so would it definitely be a better option to use this to book the holiday?

OP posts:
GreenClock · 10/03/2022 11:47

As someone who successfully made a Section 75 claim in 2020, I’m with your husband!

If you dislike the notion of credit you can pay off the credit card immediately with your savings (and I’d definitely do this unless the card offers 0% interest). The important thing is the protection.

Original poster
Sofiegiraffe · 10/03/2022 11:47

@feministqueen

Agree with the others for the reasons listed above but also....

If the credit card is 0% and you can pay monthly then why wouldn't you want the money in your bank?! Better in your pocket!

I'm not sure what you mean?

OP posts:
billyt · 10/03/2022 11:48

We had two holidays booked in 2019 which were cancelled due to Covid.

Jet2 refunded us immediately, no bother.

Ikos Holidays who sell Ikos breaks in the UK pissed us around and lied to us for months regarding a refund. Eventually we did chargeback. That cost them extra.

if the supplier goes bust you have ways to get your money back with a. CC.

You don't have to pay the whole lot on a CC. As long. you spend £100 you're covered up to £30k(I think)

Getoff · 10/03/2022 11:50

There's two separate issues, how you pay, and when you fund it.

You pay with a credit card, for the consumer protection reasons given. (Having said that, I think if you pay only a tiny amount, the deposit, with a credit card, and the rest with a debit card, I think you still have the same protection. But check that.)

Paying with a credit card does not necessarily mean you have to pay for the holiday over several months after you've had it. I think it is better to save up first.

The only scenario where I would pay for my holiday over a period of months is if (a) the credit card is interest-free and (b) I had savings in the bank to pay the whole thing off at a moments notice and (c) I was cash-strapped enough that I was worried about some other more urgent expense cropping up, and for that reason did not want to pay off the whole card balance immediately.

Getoff · 10/03/2022 11:53

So I agree with those saying you are both right. A holiday should only be paid for when the money to fund it has been saved in advance, but the actual payment should be made at least partly with a credit card.

qualitygirl · 10/03/2022 11:53

Assuming you are in the U.K. @Sofiegiraffe? Then the reasons above are correct...however on the off chance that you are in Ireland then there is no extra protection in using a credit card in Ireland

Original poster
Sofiegiraffe · 10/03/2022 11:54

Thanks @Getoff - that's very helpful and clear enough for my sleep deprived brain to understand!

Yes I'm in the U.K.

OP posts:
thevassal · 10/03/2022 11:54

@Sofiegiraffe

Thanks all this makes sense now.

I've been accepted for a credit card that has 0% on purchases for 20 months, so would it definitely be a better option to use this to book the holiday?

As long as you can definitely afford to pay it back, then yes it is a better option. If you're only hoping you will have the money in time then it's not!

In addition to what others have said about protection, which is the biggest reason for using a credit card for big purchases, using a credit card and paying it off fully each month boosts your credit score which is good if you want to apply for a mortgage or take out a loan.

Some credit cards also offer cashback for purchases (although at a miserly rate atm).

Comefromaway · 10/03/2022 11:54

I had to phone my credit card company at the start of the pandemic as we had moved house just prior to lockdown. They said that they could see I had bought various theatre tickets and travel/holidays and to let them know if I had any problems getting refunds due to cancellations as they would sort it for me.

BarbaraofSeville · 10/03/2022 11:56

@Sofiegiraffe

Thanks all this makes sense now.

I've been accepted for a credit card that has 0% on purchases for 20 months, so would it definitely be a better option to use this to book the holiday?

Yes. Just make sure you set the appropriate amount of savings aside so you don't end up in a position where you have credit card debt and no savings.

Companies go bust. Monarch went bust two days before we were due to fly with them. Because I'd paid for the flights with a credit card, I was able to just buy new flights with another airline and my credit card refunded the cost of the lost flights and the extra cost because the new flights were much more expensive due to short notice and because lots of other ex Monarch customers were in the same position.

Without that protection we'd have probably either had to pay a lot more to save our holiday or lose the money we'd spent on accommodation, airport parking, hire car etc, because it wasn't a package.

There's many many advantages of using a credit card that have nothing to do with spending money you don't have or getting into debt. You see endless posts on here about people having problems that just wouldn't have happened if they'd have paid using a credit card instead of a debit card.

BronwenFrideswide · 10/03/2022 11:57

As others have said the Credit Card gives you added protection, I pay all holidays and flights with one and then pay it off immediately or over a couple of months if it is an interest free card.

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