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A Holiday To Tenerife Could Take Consumers Ten Years To Pay Off

With 11%[1] making minimum repayments on credit cards each month, this is the debt sentence travellers could face

  • Holidays on credit: Consumers are predicted to put 8%[2] more of their holiday spend on credit cards this year, racking up a total bill of £9 billion. This represents more than a quarter (27%) of total overseas travel spend
  • Debt sentence: 11% of credit card users will opt to make minimum repayments which could mean a £1,232[3] trip to Tenerife for a family of four could take 10 years and four months to pay off incurring £919 in interest
  • Minimum repayments falling: In 2010, the average minimum repayment was 2.15%, today this has fallen to 1.53%. This means the same trip to Tenerife will take almost two years longer to repay and £279 more interest
  • Small tweak=big profits: Based on the average balance of £1,905, reducing the minimum repayment by 0.62% will cost £411 more in interest every year. This totals £1.4 billion for 3.3 million minimum repayers[4]
  • Play your cards right: In the absence of ATOL protection, booking travel with a credit card offers the security of Section 75 insurance if problems occur or the company goes bust, but this debt must be managed sensibly As we reach the end of the biggest holiday booking month of the year, new findings released today by credit card comparison website, in partnership with the Centre for Retail Research[2], reveals that consumers are set to add a whopping £9 billion to their credit card bills during 2014 on holiday bookings alone - 8% higher than 2013. However, as more than one in ten (11%)[1] consumers opt to make the minimum repayment on their credit card every month, a holiday for a family of four to Tenerife could take over ten years to repay and increase the cost of the holiday from £1,232 to £2,151. This is a total interest bill of £919 as they could still be paying for the trip in 2024[3].

Minimum repayments still going down

Unlike mortgages and loans, credit card holders can choose how much they want to repay. The only restriction is the prescribed minimum repayment, the lowest amount the credit card holder must repay each month to avoid penalty charges. From April 2011, providers were forced to set the monthly repayment on all credit card products to at least 1% of the outstanding balance plus interest. **However,’s market analysis reveals that the average minimum repayment on credit cards has fallen from 2.15% of the balance in 2010 to just 1.53% today[3], a small reduction which costs consumers £1.4 billion[4] a year.**Overall, 68% of providers charged consumers more than 1% of the outstanding credit card balance in 2010, today this has fallen to just 34%. For consumers, this means that booking a holiday to New York which costs £3,561 would take over 16 years to repay and £3,048 in interest if the minimum repayments were made. However, booking the same holiday in 2010 would take 12 and a half years to repay and £2,041 in interest, £1,007 less. Table one – cost of travel to top ten holiday destinations if the minimum repayment is made on the credit card bill[3]  

Source: all prices are based on four people travelling for 7 nights; calculations are based on industry analysis

It doesn’t have to be that way

Consumers don’t have to let their annual holiday leave them with a 16 year debt sentence. If you are planning to pay the bill off in full, by using a best buy cash back credit card, such as the American Express Platinum to pay for a trip of a lifetime to Cape Town, travellers could earn 5% on the first £2,500 spent in the first three months and 1.25% thereafter. For those who cannot pay the bill off in full there are some great 0% deals for purchases including Tesco and Santander’s 18 month cards which are impossible to beat at the moment – the next best offers are at 15 months 0%.

In the Absence of ATOL protection, section 75 could save the day

Booking a holiday with a credit card offers consumers extra protection, particularly if the travel company goes into liquidation before the holiday is taken. Not all holidays are covered by ATOL protection, particularly when you book flights and accommodation separately. If this is the case, section 75 protection of the consumer credit act is in place to protect people if there is a problem with the holiday or the company goes bust in which case the credit card issuer will accept liability and make a refund. This covers purchases for between £100 and £30,000. Will Becker, CEO and co-founder of comments: “With credit card spending set to increase by 8% this year, consumers seem far more confident that they can manage this additional debt. However, for one in ten making minimum repayments on interest bearing credit cards, this is a long and costly process, inflating the price of purchases by 100% in some cases. Increasing the minimum repayment from 1% to 2% would save 3.3 million credit card holders £3.5 billion[5] a year in interest and leans towards a more responsible lending criteria. Providers will of course argue that more people will fall into default; however these customers are highly profitable. “There are ways that consumers can manage their credit card debt without falling onto the minimum repayments bandwagon. For example, if you are planning to use a card for balance transfers and purchases you should opt for a card with equal length promotional offers for both - or use two separate cards. Alternatively, transfer the balance to one of the long term BT deals such as Barclaycard’s Platinum 30 month offer." To research the best credit card deals available, visit The website enables consumers to see exactly how much money they will earn or save by switching to the best deals based on annual spend, borrowing and repayments. It also identifies which of these deals consumers are actually eligible for currently a major inefficiency with rejection rates hitting 70%.


About, launched in 2007, is the UK’s leading credit-focussed comparison website which sets out to make it simpler for consumers to compare credit cards, loans and mortgages. With a revolutionary approach to credit comparison, uses exceptional comparison tools to empower people to make better financial choices.

Notes to Editors:

1. UK Plastic Cards 2013 2. All research and analysis is based on market analysis carried out by Professor Joshua Bamfield from the Centre for Retail Research (CRR). The results are derived from published national and international retail and economic data, BRC, Euromonitor and Mintel, previous studies by CRR, and a survey of 50 large retailers across Europe. All figures are quoted in value terms wherever possible at current prices with no seasonal adjustments. 3. See table one, based on’s most popular holidays.

  • All calculations are based on’s credit card industry analysis from the Defaqto data feed.
  • Minimum repayments for 2010 are calculated by taking 2.15% plus interest or £10.30 on average. For 2014, it’s the higher of 1.53% or £11.10 on average.

4. £1.4 billion additional interest for 3.3 million minimum repayers is calculated by:

  • The average credit card balance is calculated using the total debt outstanding on credit cards (BBA - £57.7 billion) divided by the total number of credit card holders (30.3 million – source UK Plastic Cards Report 2013) = £1,905
  • Based on the average credit card balance of £1,905, consumers making the minimum repayment will incur an additional £411 a year if the amount is reduced by 0.62% from 2.15% to 1.53%.
  • 11% of all credit card holders make the minimum repayment each (UK Plastic Cards report 2013) month totalling 3.3 million.
  • 3.3 million x £411 = £1.4 billion

5. Increasing the minimum repayment from 1% to 2% would save 3.3 million credit card holders £3.5 billion[5] a year in interest is calculated by:

  • Based on the average credit card balance of £1,905 (as calculated in 4 above), increasing the minimum repayment by 1% saves each consumer £1,052 in interest payments each year.
  • £1,052 x 3.3 million minimum repayers = £3.5 billion

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