A Holiday on Your Credit Card

by : Mildred Parker

Millions of Brits escape abroad for their holiday breaks, and a new report by moneyextra.com suggests that paying a holiday using a credit card is the best way to go.

Reports by Moneyextra.com show that the credit card offers good financial cover for British holiday makers are better protected against separate elements of their break.

But the company argues that using credit cards to pay your holidays ensures that the card company is jointly liable for breaches of contract or 'misrepresentation' by your travel firms.

It says that should a travel company go bust, holiday makers who used credit cards would be covered as long as the sum is more than ?100 and the amount you put on your card less than ?25,000.

The ailing British economy only means that the cost of a family holiday in Europe is up by several hundreds of Pounds.

More and more people turn to cheaper ways of cutting down holiday costs including booking low-cost flights and separately booking hotels online.

However according to Moneyextra.com, consumers opting for separate hotel and flight bookings will not enjoy the same protection as traditional holidays which are covered by Air Travel Organiser's Licensing [ATOL].

The company suggests that one way for consumers to protect elements of their vacation going bust is to pay using the credit card.

However, travelers have been warned to watch out on over spending.

Moneyfact's Michelle Slade advised, "But holidaymakers need to ensure they're aware of the additional charges they will face for using their cards in a foreign country."

Consumers have also been advised to look out for introductory purchase deals which are a good way to pay for a holiday if money is tight ahead of pay-day. They offer a financial buffer zone, giving you a cost-free way to purchase a holiday but you must pay the debt off in full within the deal period.

Among the best on the market at time of writing are: HSBC Bank MasterCard - 0% for 12 months, then 15.9% APR; Halifax All in One MasterCard - 0% for 10 months, then 15.9% APR and Lloyds TSB Advance MasterCard - 0% for 6 months, then 11.9% APR.

Cashback credit cards also offer a good deal for credit card consumers because this type of card will pay back a percentage of the purchase each time it is used.

It is also possible to earn 1% money back on all your spending and in some cases as much as 5% for an introductory period. Other cards enable you to generate points that can be redeemed for rewards such as flights and holidays.

One cashback credit card worth considering, according to Moneyextra.com, is the American Express Platinum Moneyback Credit Card which offers a 5% cashback for three months on spend up to ?4000 pa. In addition to that, it offers 0.50% on spend up to ?3,500 per year; 1.00% on spend between ?3,501 - ?10,000 per year; and 1.50% on spend over ?10,001 per year.

Also in the market, the Capital One Platinum is a cashback MasterCard which offers consumers 4% cashback until August this year on spend up to ?1,500 pa.

Consumers also get 1.00% on spend up to ?1,500 per month. Other cards such as the Barclaycard Platinum Cashback MasterCard/Visa gives 4% until end of July this year on spend up to ?750 per month. There is more good news with this card as it offers a further 0.50% on spend up to ?6,000 per month; and 0.5% cashback on supermarket and petrol spend until 1.1.10.

Analysts believe that careful spending by credit card consumers could mean that they are better off despite the credit crunch.