Many travelers often reach for their credit cards when it comes time to book that much-needed vacation. It's quick, easy, and you can worry about the bills later, right? However, this common method might not be the most economical or stress-free way to handle your travel expenses.
There's a better way: Vacation Loans
Instead of loading more onto your already buzzing credit card, consider a vacation loan as a smarter, budget-friendlier pathway. Are you considering what's better better between vacation loans vs. credit cards? Here’s a few reasons why vacation loans are better.
Budgeting Made Simple
A vacation loan gives you a pre-set amount of money to use for your holiday expenses, making it far easier to avoid those impulsive upgrades and extra splurges. When the cash you have is all the cash you get, sticking to your budget becomes part of the plan.
Cost-Effectiveness
With average credit card APRs soaring at around 24% and personal loan rates averaging about 12%, the math is straightforward. Opting for a vacation loan could cut your interest expense significantly. Here’s a simplified comparison based on a $3,000 expense:
| Credit Card at 24% APR | Personal Loan at 12% APR |
| Total Interest Paid: $599.09 | Total Interest Paid: $264.16 |
| Total Payments Made: $3,599.09 | Total Payments Made: $3,264.16 |
| Payoff Timeline: 18 months | Payoff Timeline: 17 months |
| Total Saved with Vacation Loan: $334 (and a month)! | |
This example shows that not only could you end up paying way over twice as much in interest with a credit card, but it would also take you longer to be debt-free.
Predictable Repayments
A vacation loan is a separate entity from your other debts, with its own fixed monthly payment and end date. This clarity makes financial planning much easier, as you know exactly when and how much you need to pay until your vacation is fully paid off. Also, your credit card doesn't have a big, random spike in spending, which could cause your payments there to fluctuate over a couple of months. No surprises, no revolving debts complicating your budget.
At Radiant Credit Union, we pride ourselves on offering interest rates that are typically lower than the national averages. By choosing a vacation loan over high-interest credit cards, you not only save on interest costs but also gain peace of mind with structured and predictable payments. It’s time to travel smart with Radiant by your side. Plan better, enjoy more, and stress less – your vacation deserves it, and so do you!
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