42% of Australians pay for holidays on plastic
Australians fork out an average of $8,500 on international holidays, according to new Mastercard research.
When planning a holiday, it’s easy for the costs to add up. By the time you book your flights, accommodation, insurance and organise your spending money, your holiday costs could grow well into the thousands. But exactly how much are Australians spending on their holidays and how are they paying for it?
Mastercard’s Consumer Purchasing Priorities survey gives us an insight into just that. Involving 1,258 Australians between the ages of 18-64, Mastercard explored how much the average Australian spends on holidays, the breakdown of how we allocate our travel budget and the methods we use to spend overseas.
According to the survey, the average Australian spends $8,562.30 on an international leisure holiday. Out of the respondents, 42% of Australians preferred to cover these costs using a credit card. This was followed by cash (35%), debit card (15%) and prepaid cards (8%).
Which travel money options do Australians prefer?
So, why are we so keen to put for our holidays on plastic?
“I think there are three key reasons,” says Andrew Cartwright, country manager of Mastercard Australia. “Firstly, the convenience. Secondly, avoiding the cost of cash and using your savings and thirdly, the advantage of a line of credit.”
Plus, there’s also the security of a line of credit if you need to make an emergency purchase and travel-centric extras such as complimentary travel insurance, global concierge services and low or no foreign transaction fees with some credit cards.
Of course, paying for your holiday on plastic isn’t an entirely risk-free strategy. In a survey conducted by finder in 2016, results showed that the average Australian returned from holiday with a credit card debt of $2,075. On top of this, 44% of Aussies were unable to repay this debt within a month of coming home. While Cartwright didn’t think this amount was too worrying considering the average Australian’s credit card debt is $3,083, it’s best to stick with a budget and remember that you have to repay everything you charge (plus interest, most of the time) when you return home.
Cartwright wasn’t surprised that credit cards were the frontrunner for Australians paying for their domestic and overseas trips, but he does think that prepaid multi currency travel cards will continue to grow with popularity.
“We’re increasingly seeing a high demand for the multi currency prepaid cards. I think the attraction there is the ability to load funds and locking your currency in the exchange rate prior to travel. Plus, there’s also the advantage of not having to carry cash,” explained Cartwright.
Cartwright pointed out that Australians have loaded over $2 billion in funds onto their Qantas Cash Mastercards in the two and a half years it has been on the market. This is just one example, but Cartwright believes that the ability to pay in multiple currencies and lock in exchange rates will see more Australians taking advantage of travel money cards in the future.
While cards are king, the Mastercard survey did prove that Australians are still likely to use cash for some types of transactions. For example, cash is the most used payment method for taxis (61%) with 48% of Aussies concerned for the safety of their card when travelling abroad. Most cards are protected by anti-fraud guarantees, but there are some strategies you can take on board to give your finances an extra layer of protection.
One strategy involves using several travel money products rather than putting all of your eggs in the single basket. For example, Cartwright suggested that you could use a prepaid travel card as well as a credit card or a mixture of credit, your debit card and cash to make purchases while on holiday. This way, if your card is lost or stolen and you need to lock your account, you’re not stranded without cash and will have a back up to get you by.
You should also notify your provider that you’re travelling overseas before you leave and have the relevant emergency numbers saved in your phone for easy access in the case of an emergency.
With the school holidays underway and the Easter long weekend quickly approaching, see our travel money guide to compare prepaid cards, credit cards, debit cards and more to determine the best way to fund your next holiday.
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