Travelling abroad isn’t easy. From arranging for the visa, to buying the flight tickets, and booking your accommodations, travelling to a foreign country is an intricate process with several moving parts. Above all, you need money for all these steps to be smoothly completed. A typical trip to the Americas or Europe will set you back by a few lakh rupees. Unless you have these funds, you’re going to have money problems in an alien land, which is never going to be a pleasant experience.
Let’s look at some ways to raise your dream trip:
Start Saving Early: This is a no-brainer. Going on a foreign holiday is a discretionary expense, and you should be able to pay for it from your own pocket. You can start planning your trip well in advance – ideally, more than a year before you fly. This gives you time to prepare your travel fund. You need the money to be kept in a risk-free and liquid instrument. Bank deposits and liquid mutual funds are ideal for this. You can do a monthly recurring deposit or a systematic investment plan to create this fund. You must take into account all possible expenses as well as forex fluctuations.
Have An International Cricket Card: Buy an international credit card before you travel. If you’re short of funds while on your trip, the credit card would come to your rescue. Before you use a high-end card, make sure you know all associated charges. An international credit card would typically charge a non-refundable annual fee. While abroad, you may be charged a range of fees for cash withdrawal, foreign currency exchange, and POS transactions. Before you go on your trip, intimate your card company about your trip, so that they do not block it suspecting an authorised transaction from a foreign land. Lastly, you’ll need to settle the fat balance on your card after your trip ends, so make sure you have sufficient funds for this. Carrying over a card balance would cost you plenty, since credit cards apply steep interest charges.
Get A Personal Loan Or Holiday Loan: If you’re short of cash, don’t have a credit card, and need funding for your trip, you could take a loan. Remember to do this within limits. Personal loans have an annual interest rate ranging typically between 10% and 20%. You can transfer the loan into a prepaid travel card, debit card, traveller’s cheque or forex. Additionally, you could apply for a holiday loan which is offered by some banks and lending institutions. This is basically a variant of the personal loan, but designed specifically to meet the requirements of travellers.
Approach A Travel Operator: There are some tour operators with financing schemes for your travel. The schemes typically tie up with NBFCs and FIs to provide the funding for tickets, accommodation, food, entertainment, etc. The scheme finances you up to a limit of Rs 5 lakh with a repayment tenure of one to five years. The interest rate you pay is similar to personal loans. Once the travel is financed and completed, you can return and begin paying EMIs.
One final advice: travel for pleasure is a discretionary expense. As such, you should fund it using your regular income, and rely less on loans. When you use credit cards or loans, always have a repayment plan in place, failing which you could hurt your own credit history.
(The writer is CEO, BankBazaar.com)