Summer Holiday Leading to Massive Debt for Many in UK

The stats on the number of adults living in the United Kingdom who will go into debt in 2010 in order to pay for a summer holiday are simply staggering. According to a survey conducted by a UK insurance firm that number stands at 10 million people, all of them adults, who are going to knowingly enter into debt in order to fund their holiday through credit cards, borrowed money from friends or family, bank overdrafts and the payment plans offered by travel agents.

While that might sound reasonable enough, the survey went deeper than this and discovered that half of these individuals know that they will not actually be able to repay what they borrow any time soon. With the extra interest charges that will accrue, credit card borrowers alone will be paying hundreds of pounds extra for their holidays by the time they are finally able to pay them off. Of course, the credit industry is celebrating because this is terrific news for them, but is it wise for the 5 million adults who simply wanted to take a break this summer?

Here’s where things go from ‘understandable’ to utterly ghastly. The fact is, many of these adult spenders are using cards that have a 0$ introductory interest rate that eventually rises to 18% or more in terms of its APR over time. Since most in the UK are currently finding it tough to pay off any expenditure on credit cards in a rapid fashion – and including the fact that this is probably not the only purchase charged to their card – that ends up being a very hefty rate for borrowing money indeed.

The statistics show that the average person in the UK will spend a little over £1,100 for their much needed break and at the rate they are borrowing, not including other purchases which can jack up the balance, they will be paying £100 or more on top of the cost of the initial purchase. Experts advise against this method of funding and instead cite instant access savings account as a much better way to pay for a summer holiday – in advance. A few pounds tucked away per week could buy a much better trip in cash.

In addition, another note that spenders should take into consideration is the added cost of using their charge card while overseas. A great many credit card companies apply extra fees for processing transactions made abroad and this means that consumers need to find out in advance if what they buy while they are away will either nullify the 0% offer or even add additional fees to the cost of what they have bought.

Consumers are also wise to keep any purchase they make over £100 in order to keep themselves inside the Consumer Credit Act’s Section 75 which specifies that they have additional protection if they make a purchase on goods or services that falls between £100 and £30,000.

Summer holiday savings plans may not appeal to every adult in the UK but they could certainly help any adult avoid debt altogether.