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Last Updated : Jul 29, 2019 09:43 AM IST | Source:

Avoid taking loans to splurge on your vacation

A little bit of planning and research can make your travel more enriching because of all the potential savings on money as well as time.

Prateek Mehta

Hans Christian Andersen famously said 'To Travel is to Live.' As India becomes prosperous, it is natural for her people to travel all over the country and the world. Indians are traveling more than ever. As per the statistics shared by the World Tourism Organization, five crore Indians are set to travel abroad this year. This number has more than doubled from 2.3 crore in 2017. Over the years, people have become eclectic in their travel choices. It is almost impossible that you wouldn’t bump into fellow Indians irrespective to where you are traveling in the world.

While the first travel goals are centred on the tourism hot spots, we have observed that preferences tend to change very quickly. Travellers of all ages are adding sporting events, marathons, adventure, outdoors, nature and even intellectual pursuits to their travel lists. It is hardly a wonder that Instagram has more than a billion travel-related posts. While the propensity to travel is growing across age groups, the younger generation is often the most excited about visiting different places.


However, there is a profound gap between their savings and their aspirations.

Travel now, but struggle to pay EMIs later

The older generations usually postponed an out-of-reach travel goal. However, the younger generation has a much better access to credit and has been able to travel on personal loans, credit card EMIs (equated monthly instalments) or travel loans. This development has surely helped a lot of people fulfil their travel ambitions. However, the debt overhang leaves a bad taste post travel. Many struggle with the EMI burden and often end up sacrificing a lot because of the interest and the monthly deductions.

This becomes onerous because, many times, the entire cost of taking credit is not factored in. Apart from the interest that can be 12-18 per cent on personal loan/ credit card EMIs, there might be a processing cost (1-2 per cent) and forex spreads (2-3.5 per cent) that add to the costs. The worst mistake that you can make while repaying is making partial payments on your credit card. The cost of credit card debt can be as high as 36-42 per cent. The compelling zero per cent EMI offers also come at a cost. You typically forego any discounts that might have come your way if you would have planned and negotiated.

Plan you enjoyment

While traveling at the drop of a hat and on an impulse can be fun, it can be very expensive. Try to plan your longer vacations. Impulsive travels can be your long or longer weekends. But the big travel goals can be planned. You can save up to 30-40 per cent on travel tickets, hotel rooms, popular sights, experiences and entry charges to museums etc. Even if you can afford the price tags, a saving of more than 30 per cent can potentially get you to do more.

For forex, there are travel card options with very low spreads. Even if your bank lets you withdraw from any ATM across the world, often the fixed charge for every withdrawal is very high. Be aware of the same and plan to have some cash and some money loaded in a travel card. If most of the items are already paid for, you can just swipe your credit card and save yourself the cost of buying/ loading currency.

While planning is often useful, there are last minute deals also available for some of the experiences. For e.g., StubHub, Ticketmaster etc. often have last minute deals on shows, plays and concerts. Do a little bit of preparation on your travel destination and see if there is a deal/ groupon-like platform that can get you deals.

One counter intuitive tip is to talk to travel agents. There are many organised travel agents like the old-world Thomas Cook to Travel Triangle and the regular online travel agency like makemytrip. Some of them might help you lock into prices today if you were to get into a holiday savings scheme. This is typically a product where a bank fixed deposit is set-up which will get redeemed close to your date of travel. The travel agent would get in touch with you a few months before the planned travel date and customise the plan for you. While you get the benefit of a bulk discount that only a travel agent can generate, the agents get the benefit of visibility on advance demand.

Unplanned shopping often inflates the total cost of travel. Regular travellers often lament the fact that unplanned shopping on fashion, electronics, alcohol and local curios add up to 20-30 per cent to the total vacation costs. You can be smarter about this by budgeting and keeping within the same. You are better of adjusting some other travel expenses because duty free or non-duty free shopping often gets out of hand. On the other hand, if you were planning to buy something anyway, look for deals that you get because of Indian custom duty structure. Sporting goods, expensive or niche electronics, and art are often available at reasonable prices in foreign currencies.

Do not forget to take healthcare insurance. Healthcare is often expensive outside India. Your experience can sour and the costs can bloat significantly if you are not covered. Carry your medication because getting a local prescription might become a challenge.

Baggage losses happen. Do not forget to bill your additional costs to your airline. Keep a track of your expenses because of the baggage loss and do not lose the invoices.

So try to avoid the EMI as much as you can. A little bit of planning and research can make your travel more enriching because of all the potential savings on money as well as time.

(The writer is CEO & Co Founder

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First Published on Jul 29, 2019 09:43 am
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