Getting away from it all is good for people. Even corporations acknowledge the benefits of vacation time, and psychologists confirm that one way to stay “healthy,” both mentally and physically, is to get away periodically from the stress of business and the routine of daily life.
But how best to pay for that time away? Most people finance their vacations by running up their credit card balances. A new and arguably better alternative, though, might be an unsecured personal loan, according to Zack Friedman, founder and CEO of a personal finance site, Make Lemonade.
Friedman notes that, unless travelers have the means to routinely pay off credit card balances every month, the high interest rates can change that dream vacation into a nightmare amount of debt very quickly. A better way, he insists, is to secure a personal loan that has a specified payback term at reasonable interest. Even though he states that the “best way” is to pay cash when you jet off to exotic destinations, he understands that is not always an option.
The ability to obtain a personal loan for a vacation will hinge on creditworthiness, past history and overall financial stability. But it is almost always a better alternative than piling new debt onto existing credit cards, according to credit analysts. An alternative for homeowners may be to tap into a “secured” loan fund such as a home equity line of credit or an existing home equity loan.
The financial site Lending Tree cites research to confirms “many Americans take too few vacation days, and that those who take a reasonable number are happier and more productive.” The suggestion is that it is financially responsible to seek funding solutions that carry the best terms and lowest interest rates.
All the experts caution against signing up for new credit cards that promise “zero interest,” extended no-payment periods, or balance transfers as enticements. Those who finance vacations in that way are likely to return to unpleasant reality.