credit card travel

Debt lag: How to deal with debt after a holiday

Stuck with credit card or loan debt after a holiday? Here's how to deal with your "debt lag".

Many Australians use credit cards or loans to pay for trips away, whether it's just for a part of it, such as accommodation or flights, or even the whole trip! But what happens when you return home and you have to repay the credit card or loan debt? To make sure your holiday debt doesn't stay with you for years to come, we'll show you how to deal with your holiday debt lag.

What is "debt lag"?

Debt lag is any debt that you've accrued paying for a trip away. This can be money you charged to your credit card before you went, such as flights or pre-booked accommodation, or even a personal loan you took out before you went to pay for the trip.

Why is debt lag so common?

Many people rely on products like credit cards and personal loans for travel and can get into debt even when they don't plan to. Here is what is contributing to the debt lag problem:

  • Credit cards are used for spending overseas. Many credit cards offer overseas travel-spending features such as $0 foreign currency fees and $0 overseas AM fees. Because of this, people spend on their credit card and are not restricted by what they have available in their bank accounts, only their credit limit. It's important to repay what you spend on a travel credit card as quickly as you can.
  • Personal loans for travel. If you take out an unsecured personal loan for travel you are spending money that you don't currently have. Unless you have a plan to repay it soon after your return, you could be repaying that debt over the next few years. This will limit your ability to save and take future trips within that period unless you borrow money for it again, keeping you in a debt trap.

I have travel debt, what do I do?

If you've returned from a holiday and have leftover debt, there are a number of things you can do to repay it sooner. Here are some of your options:

  • Make more than your minimum credit card repayments. Each credit card has a minimum repayment that you're required to make each month, usually 2%. If you just make this minimum repayment it will take you a long time to repay your debt. Pay as much as you can towards your credit card to ensure you're not getting charged too much interest and you can get the debt repaid as quickly as possible.
  • Put extra or lump sum repayments towards your personal loan. Personal loans also have a minimum repayment but unlike credit cards, this will ensure your debt is repaid within the loan term. However, you can repay your loan off sooner if you make additional repayments towards your loan. Just make sure you won't be charged a penalty for doing this or for repaying your loan ahead of schedule.
  • Debt consolidation personal loan. If you have multiple debts or you are paying a high interest rate on your personal loan, you may want to consider a debt consolidation personal loan. This will allow you to transfer your debt to a new loan and save on fees as well as interest. The key to a debt consolidation personal loan is to make sure the new loan is going to cost you less than what you are currently paying.
  • Balance transfer credit card. If you have debts spread across multiple cards you can consider applying for a balance transfer credit card to repay them at 0% p.a. interest for a certain period of time. Balance transfer credit cards work by letting you combine debts from multiple credit cards in the new balance transfer credit card and then repaying that debt at 0% p.a. for a set period, usually between6-24 months. Make sure you'll be able to repay the debt in this period as the revert rate on these cards can be quiet high, around 20% p.a.

How can you avoid debt lag (before you go away)?

The easiest way to avoid debt lag is to make sure it doesn't happen in the first place. Here are some ways to avoid getting into debt over a holiday:

  • Book your trip well in advance and repay it before you go. If you're planning on relying on credit for a trip, for example for your flights, then why not book further in advance? Work out how long you would need to repay the cost of your purchase and book that far in advance (you may even find better deals to reward your forward planning!). Then, when the time for your trip comes around you will be debt-free!
  • Consider Layby travel options. There are many ways you can "layby" travel. Companies let you select your travel option, put down a deposit and pay at a later date. This can be an option to consider if you can save up for the trip over time and want to repay it before you go.
  • Rely on travel debit cards rather than credit. Many travel debit and prepaid cards offer many similar features to travel credit cards, including no foreign currency fees and $0 ATM withdrawal. Some even let you earn rewards points.

Compare your options to deal with debt lag

Rates last updated December 15th, 2018
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Product Description
ANZ Fixed Rate Personal Loan
12.45% (fixed)
13.32%
$5,000
1 to 7 years
$150
You'll receive a fixed rate of 12.45% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$5,000
3 to 5 years
$500 (Upfront fee)
You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.
RateSetter Unsecured Personal Loan - 3yr Fixed
From 8.11% (fixed)
8.71%
$2,001
0.5 to 5 years
$89
You'll receive a fixed rate from 8.11% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
You'll receive a fixed rate between 13.99% p.a. and 29.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Flexible repayments options.
HSBC Personal Loan
From 8.5% (fixed)
9.06%
$5,000
1 to 5 years
$150
You'll receive a fixed rate between 8.5% p.a. and 16.99% p.a. based on your risk profile
An unsecured personal loan with a tailored, fixed rate where you can make additional and early repayments without penalty.
ING Personal Loan
8.99% (fixed)
9.13%
$5,000
2 to 5 years
$100
You'll receive a fixed rate of 8.99% p.a.
Benefit from no ongoing fees, no early repayment fees and flexible loan terms on amounts up to $30,000.
Latitude Low Rate Personal Loan (Unsecured)
10.99% (fixed)
12.21%
$20,000
2 to 7 years
$250
You'll receive a fixed rate of 10.99% p.a.
A secured or unsecured loan available to homeowners with a large minimum borrowing amount of $20,000. Benefit from flexible repayments and fast approval.
NAB Personal Loan Unsecured Fixed
Headline rate 13.49% (fixed)
14.36%
$5,000
1 to 7 years
$150
You'll receive a fixed rate between 11.49% p.a. and 18.99% p.a. based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
3% (of loan amount)
You'll receive a fixed rate between 7.5% p.a. and 19.99% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
NOW FINANCE Personal Loans
From 8.95% (fixed)
10.56%
$5,000
1.5 to 7 years
$495 (Based on $10,000)
You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
Apply for loans from $5,000 and get a dedicated loan manager. No security required.
Australian Military Bank Fixed Rate Personal Loan
From 7.93% (fixed)
8.77%
$1,000
1 to 5 years
from $100 to $500
You'll receive a fixed rate between 7.93% p.a. and 18.87% p.a. based on your risk profile
An unsecured loan with a low minimum borrowing amount and flexible repayment options.
CUA Unsecured Fixed Rate Personal Loan
11.99% (fixed)
12.25%
$5,000
1 to 7 years
$175
You'll receive a fixed rate of 11.99% p.a.
An unsecured loan from $5,000 with no monthly or establishment fees and flexible repayments.
CUA Discount Fixed Personal Loan (Loans over $30,000)
10.99% (fixed)
11.25%
$30,000
1 to 7 years
$175
You'll receive a discounted fixed rate of 10.99% p.a.
Receive a discounted rate for borrowing over $30,000 and benefit from features such as no monthly fees and flexible repayments.
RACQ Bank Unsecured Personal Loan
12.95% (variable)
13.25%
$3,000
5 years
$200
You'll receive a variable rate of 12.95% p.a.
A low minimum borrowing amount of $3,000 that you can use for a range of purposes. Benefit from member discounts and flexible repayments. Only available to QLD residents
MyState Bank Unsecured Personal Loan
12.99% (variable)
16.42%
$3,000
1 to 7 years
$200
You'll receive a variable rate of 12.99% p.a.
Apply for up to $50,000 and benefit from features such as fast approval, free online redraws and no penalties for early repayment.
ANZ Variable Rate Personal Loan
15.99% (variable)
16.84%
$5,000
1 to 7 years
$150
You'll receive a variable rate of 15.99% p.a.
A flexible loan with amounts starting $5,000 that offers flexible repayments and a redraw facility.
NAB Personal Loan Unsecured Variable Rate
Headline rate 12.69% (variable)
13.56%
$5,000
1 to 7 years
$150
You'll receive a variable rate based on your risk profile. The headline rate is 12.69% p.a.
An unsecured loan up to $55,000 you can use for a range of purposes. Benefit from fee-free additional repayments and a redraw facility.
Australian Military Bank Variable Rate Personal Loan
From 7.88% (variable)
8.72%
$1,000
1 to 7 years
from $100 to $500
You'll receive a variable rate between 7.88% p.a. and 18.82% p.a. based on your risk profile
An unsecured loan with flexible repayment options and a low minimum borrowing amount.
CUA Unsecured Variable Personal Loan
11.89% (variable)
12.15%
$5,000
1 to 7 years
$175
You'll receive a variable rate of 11.89% p.a.
Borrow from $5,000 with the option for flexible repayments and no monthly fees.
CUA Discount Variable Personal Loan (Loans over $30,000)
10.89% (variable)
11.15%
$30,000
1 to 7 years
$175
You'll receive a discounted variable rate of 10.89% p.a.
Borrow over $30,000 and receive a discounted interest rate. No monthly fees and a redraw facility also available.

Compare up to 4 providers

Rates last updated December 15th, 2018
$
% p.a.

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Name Product Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Amount Saved Product Description
NAB Low Fee Platinum Card - Exclusive Offer
0% p.a. for 25 months
19.74% p.a.
$90 p.a.
finder Exclusive: Take advantage of 0% p.a. interest for 25 months on balance transfers with no balance transfer fee. Ends 16 December 2018
More info
HSBC Platinum Credit Card
0% p.a. for 22 months with 2% balance transfer fee
19.99% p.a.
$129 p.a.
Offers a 0% p.a. for 22 months balance transfer and an annual fee refund each year when you spend $6,000. Plus, 2 airport lounge passes every year.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
0% p.a. for 18 months
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus points in the first 3 months and save with a $64 first year annual fee. Plus, a long-term balance transfer offer.
ANZ Low Rate
0% p.a. for 15 months
12.49% p.a.
$58 p.a.
Save with a 0% p.a. introductory rate on balance transfers for 15 months with no BT fee. Plus a low 12.49% p.a. interest rate on purchases.
Virgin Australia Velocity Flyer Card - Exclusive Offer
0% p.a. for 6 months
0% p.a. for 14 months (reverts to 20.74% p.a.)
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
finder Exclusive: Save on credit card costs with half the annual fee for the first year and a 0% p.a. interest rate on purchases for 14 months.
HSBC Platinum Qantas Credit Card
0% p.a. for 12 months
19.99% p.a.
$0 p.a. annual fee for the first year ($79 p.a. thereafter)
Save with a $0 first year annual fee and a long-term balance transfer offer. Plus, complimentary travel insurance.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% p.a. for 18 months
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Save with a $64 first year annual fee and 0% p.a. balance transfer offer. Plus, receive a $129 Virgin Australia Gift Voucher each year.
NAB Low Fee Card
0% p.a. for 18 months with 2% balance transfer fee
19.74% p.a.
$30 p.a.
Receive complimentary purchase protection insurance, a 18 month balance transfer offer and special offers from Visa Entertainment.
Citi Rewards Platinum Credit Card - Online Offer
0% p.a. for 24 months with 1.5% balance transfer fee
20.99% p.a.
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Earn reward Points per $1 spent, take advantage of a 0% p.a. for 24 month balance transfer offer, plus complimentary international travel insurance.
Citi Simplicity Card
0% p.a. for 6 months
19.99% p.a.
$0 p.a.
Get 0% p.a. interest for up to 6 months on balance transfers with no BT fee. Plus, a $0 annual fee for life.
Citi Rewards Classic Credit Card
0% p.a. for 15 months with 1.5% balance transfer fee
20.99% p.a.
$49 p.a. annual fee for the first year ($99 p.a. thereafter)
Receive 1 point per $1 spent on eligible purchases, up to $50 cashback when you meet the minimum spend and a 15 month balance transfer offer.
ANZ First Visa Credit Card
0% p.a. for 18 months with 2% balance transfer fee
19.74% p.a.
$30 p.a.
Get up to 18 months interest-free on balance transfers and save with a low $30 annual fee. Plus, up to 44 days interest-free on purchases.
NAB Qantas Rewards Card
0% p.a. for 6 months with 2% balance transfer fee
19.99% p.a.
$95 p.a.
A Visa card that offers 0.5 Qantas points per $1 spent, complimentary purchase protection insurance and up to 44 interest-free days on purchases.
American Express Explorer Credit Card
0% p.a. for 12 months with 1% balance transfer fee
20.74% p.a.
$395 p.a.
Get 100,000 bonus Membership Rewards points, a yearly $400 Travel Credit and 2 entries per year to the American Express Lounge.
NAB Qantas Rewards Premium Card
0% p.a. for 6 months with 2% balance transfer fee
19.99% p.a.
$250 p.a.
Offers 30,000 bonus points when you meet the spend requirements and Qantas Points for your everyday spending. Plus a 24/7 personal concierge.
NAB Low Rate Credit Card
0% p.a. for 6 months with 2% balance transfer fee
0% p.a. for 6 months (reverts to 13.99% p.a.)
$59 p.a.
Receive an introductory 0% p.a. interest rate for 6 months on purchases, Visa Entertainment offers and a competitive $59 ongoing annual fee.
NAB Rewards Classic Card
0% p.a. for 6 months with 2% balance transfer fee
19.99% p.a.
$95 p.a.
Get 30,000 bonus points when you meet the spend requirement, 0.75 NAB Rewards Points per $1 spent and a 0% p.a. balance transfer offer.
Qantas Premier Platinum
0% p.a. for 18 months
19.99% p.a.
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Get 70,000 bonus Qantas points when you meet the spend criteria and 30,000 more when you pay the second year's annual fee (100,000 total).
Virgin No Annual Fee Credit Card
6.9% p.a. for 36 months
18.99% p.a.
$0 p.a.
Offers a balance transfer rate of 6.9% p.a. interest for 36 months and up to 44 days interest-free on purchases, all for a $0 annual fee.

Compare up to 4 providers

Mandy’s Mauritian debt dive

Mandy found a great holiday package to fly to Mauritius with her friend. She paid for her flights and hotel accommodation with her credit card - a total of $4,000 for eight nights. While she was over there she spent a total of $2,000 in activities, food and shopping.

Mandy comes back home and realises that while she's tanned and relaxed, she has a bill of $6,000 on her credit card. Later on, she finds that a hefty sum of money has gone towards the foreign transaction fees and international ATM withdrawal fees she was charged, making her part of the 29% of Australians who come home after a trip to credit card shock.

Mandy budgets to pay off her trip within six months and puts $1,000 onto the balance each month. By the time her debt is paid off her total interest bill is $233.

Let's look at how much interest would be charged on different balances and over different time periods.

How much interest are you paying?

Elizabeth Barry

Elizabeth is the Fintech Editor for finder and writes about innovations in financial products and services – think banking products that are easier to access, faster, cheaper and personalised. She started writing about personal finance five years ago and found it was her passion (which was a surprise to no one more so than herself).

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Personal Loan Offers

Important Information*
Harmoney Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.

Citi Personal Loan Plus

You'll receive a variable rate between 8.99% p.a. and 17.99% p.a. (9.96% p.a. to 18.91% p.a. comparison rate) based on your risk profile
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years.

ANZ Fixed Rate Personal Loan

You'll receive a fixed rate of 12.45% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.

RateSetter Unsecured Personal Loan - 3yr Fixed

You'll receive a fixed rate from 8.11% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.

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