How To Finance A Student Holiday Using A Credit Card

Information verified correct on September 29th, 2016
Student Holiday Credit Card

Even if you’re a student, you can still use a credit card to help you afford that perfect holiday you’ve been dreaming of.

Travelling the world is something everyone should do when they’re young. Taking in the different sights, sounds and cultures of all four corners of the globe is a remarkable experience, but when you’re a student, affording that dream getaway isn’t always easy. As well as the low income that comes with studying full-time, there are also financial considerations like HECS fees, textbooks and living expenses to contend with.

Although you might not have a huge amount of cash stashed away in the bank, when university holidays roll around you might find yourself with a whole lot of free time and an itch to explore the world. That’s where paying for a holiday with a credit card comes in. If you plan carefully and select the right card for you, that perfect trip you’ve been dreaming of can become a whole lot more affordable.

Choosing a credit card

Before you decide whether or not to pay for your student holiday with a credit card, there are a number of things to consider. Shopping for a credit card can be confusing and a little daunting, so finding the right card for your situation takes time and research; however, certain credit cards have features that make them perfect to pay for holidays so it’s worth the time.

One way to afford your student holiday is to look for a card with a low-interest or interest-free promotional period. Many providers offer cards with a special low interest rate (sometimes even 0%) for a period usually between three and nine months. This then reverts to a standard rate once the promotional period ends, but if you’re able to book your holiday on the card and then budget to pay it off before the higher rate kicks in, you can save yourself a lot of money.

Fees are another problem to consider when using a credit card while abroad. Many people aren’t aware of it, but using a standard credit card to pay for expenses while overseas means you’re going to be hit with a raft of charges. At the top of the list is the currency conversion fee, while other providers will also charge percentage fees for any transaction made overseas. You can avoid this by choosing a card that has no foreign transaction fees.

Comparison of Student Credit Cards

Rates last updated September 29th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
ME Bank frank Credit Card
A great credit card option for students. No annual fee and a low interest rate on purchases.
11.99% p.a. $0 p.a. Go to site More info
ANZ First Visa Credit Card - Exclusive Offer
Enjoy 0% p.a. for the first 12 months on balance transfers, plus 0% p.a. for the first 3 months on purchases.
0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $30 p.a. Go to site More info
Coles Low Rate MasterCard
A low rate MasterCard with a competitive rate on purchases and a low annual fee.
9.99% p.a. 0% p.a. for 6 months $49 p.a. Go to site More info
Newcastle Permanent Value+ Credit Card
Enjoy a competitive annual fee and interest rates on purchases, cash advances, and balance transfers.
11.49% p.a. $49 p.a. Go to site More info
ANZ First Student Card
Student credit card with no annual fee for the first year and up to 44 days interest-free on purchases.
19.74% p.a. $0 p.a. annual fee for the first year ($30 p.a. thereafter) Go to site More info
ANZ Low Rate
A low rate credit card with introductory offer on balance transfers.
13.49% p.a. 0% p.a. for 18 months with 3% balance transfer fee $58 p.a. Go to site More info
Westpac Student Credit Card
A card designed for full-time tertiary students, enjoy $0 annual fee for the first year with a low credit limit and up to 55 interest-free days on purchases.
20.45% p.a. $0 p.a. annual fee for the first year ($30 p.a. thereafter) Go to site More info
Citi Clear Platinum Card
A low rate platinum credit card with a low interest rate on purchases and balance transfers.
0% p.a. for 9 months (reverts to 14.99% p.a.) 0% p.a. for 9 months $99 p.a. Go to site More info
Citi Simplicity Card
Enjoy up to 55 interest-free days and a low interest rate on purchases plus enjoy free bottles of wine from Citibank Dining Program. Offer ends on 31 March 2017.
11.99% p.a. for 24 months (reverts to 19.99% p.a.) $0 p.a. Go to site More info

Added benefits

Using your card to book your holiday and pay for other expenses along the way could also save you money in the long run. Many premium credit cards come with extra perks such as complimentary travel insurance and purchase protection. Complimentary travel insurance can save you thousands if you injure yourself or fall ill while overseas, while some cards have policies which cover unfortunate incidents like lost luggage and delayed flights. Purchase protection usually covers a period of time after you buy an item where it’ll be replaced if lost, stolen or damaged.

Many credit cards offer travel rewards points as well. Make purchases with your card to build up a bank of points, and those points can then translate to big discounts on things like flights, accommodation and car hire.

Managing your debt

It’s a fairly basic piece of advice, but remember not to get carried away and spend too much money on your travels. Returning home to a mountain of debt can quickly erase any memories of the enjoyable time you had travelling, so make sure you spend what you can afford to pay back in a given amount of time. If you won’t be able to pay your debt off before any interest-free or low-interest period expires, you could get yourself into trouble.

Plan ahead to decide how you’re going to pay off your debt. Develop a realistic budget that will work for you and stick to it. It’s also a good idea to put away your credit cards; you want to avoid adding any more debt to the amount you already have.

Another way you can pay off your holiday is to consider a balance transfer. This is when you move the debt from one credit card to another for a lower interest rate, and it can greatly ease the burden of paying back what you owe.

As an example, if you pay for your holiday on a credit card with an interest rate of 15% p.a., you could soon end up having to pay back a whole lot more than the original cost of the trip. But if you transfer the debt over to a card that offers a 0% interest rate on balance transfers, you’ll only have to pay off the principal amount of your debt. Be careful, though, as these balance transfer deals do come with restrictions.

Tips for using a credit card when paying for a holiday

Booking your trip

  • When booking flights, some airlines will charge a high surcharge for credit card use when paying online, so consider using a payment system like POLi or PayPal.
  • Watch for different special offers that may help you save, such as interest-free promotional periods.
  • Know the benefits and perks attached to your card. Some come with complimentary travel insurance, while other cards have travel reward programs that offer discounts on flights, accommodation and car hire.

While on your trip

  • You’ll pay foreign transaction fees if using a credit card overseas, so you may want to find a card which waives these fees.
  • Avoid using a credit card to get cash quickly through a cash advance at an overseas ATM. This will result in multiple fees.
  • Be sensible. Take care not to spend more than you can afford to pay off over a relatively short period.

When you return home

  • Write up a budget and begin to pay your balance off. Set a realistic target and work towards it.
  • Make large payments right away, especially if your card has an interest-free period. This will greatly reduce your balance, and a smaller balance means less interest to pay.
  • Try not to add to the debt you already have.
  • Consider a balance transfer to help you pay off your holiday costs.

Pros and cons of paying for a student holiday with a credit card

Pros

  • You can travel overseas without having the money upfront.
  • Paying for a large expense like a holiday with your credit card could help you earn more points or rewards.
  • Some premium credit cards have useful benefits like travel insurance.
  • Credit cards are accepted all over the world and they are safe and secure to use. They negate the need to carry around large amounts of cash, and transactions on the card are protected by the provider.

Cons

  • Paying for flights with a credit card can have surcharges.
  • Using some cards overseas will incur foreign transaction fees, so you may need to find a card that waives these fees.
  • Interest payments might be high if you don’t pay your debt off quickly enough.

How to compare student holiday credit cards

You can compare holiday credit cards based on a number of factors.

Interest rates

Is there a low interest rate on purchases? Look for a card with an introductory low interest rate — some even have 0% interest. This will ensure you only have to pay off the cost of your holiday, not any accrued interest as well.

Foreign transaction fees

As mentioned above, many people aren’t aware of the fees attached to foreign transactions for some cards. If you’re using a credit card while abroad, you obviously won’t want to be smacked with a whole heap of charges when you return. Look for a card with no foreign transaction fees.

Annual fee

Students are most likely to be on lower incomes, so avoiding fees is always a plus. Say your card has an annual fee of $50, over a 10-year period that adds up to $500 you could have saved. Some cards feature low or zero annual fees, so shop around for the one that suits your budget.

Balance transfers

Ask yourself what rate different cards charge on balance transfers. Cards with a low rate on balance transfers can offer the time and flexibility you need to get back in control of your credit card debt more easily.

Additional benefits eg complimentary travel insurance

There are a couple of other factors to consider that can help make a good student holiday credit card. Does the card include complimentary travel insurance and/or purchase protection? Is there a rewards program that can help you save money on travel expenses? Read the fine print to make sure you know exactly what is included with each card.

Income requirements

Being a student unfortunately means you usually have a lower income than those working full time. Many credit cards have minimum credit limits or minimum income requirements that you should be aware of. Failing to do so could see your application denied, and this will appear on your credit file.

With careful planning and a sensible approach, using a credit card to pay for your student holiday is a great way to broaden your horizons and make that getaway you’ve been dreaming of much more affordable. After all, why should you have to wait until you’re older to see the world?

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Credit Cards Comparison

Rates last updated September 29th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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