Expense of holidays looms over cash-strapped families

Families struggling to make their budgets stretch as inflation continues to soar need to ensure they stay on firm financial ground as one of the most costly times of the year approaches – summer holidays.

“If borrowing is the only way consumers can pay for their much-needed break in the sun, protecting their loan with affordable insurance is more important than ever before,” says Shane Craig of stand-alone payment protection insurance provider Paymentcare.co.uk.

“The financial landscape of the UK this summer is very different to last year but the demands on families’ resources remain the same.

“The summer holiday period is always costly but for those with limited funds, finding the means to pay for holidays and days out this year could be more of a headache than ever due to the steep increases in living costs, the drying up of cheap mortgage deals and the rise in unemployment.”

Top of the list for a great many kids is a day out at Alton Towers – but with admission for the day costing £78 for a family of four, it’s a wallet-busting treat, especially with the cost of travel and food added on.

And for those who are determined to get away to the Costas for a couple of weeks, the strength of the euro means travellers will have to fork out more on spending money than ever before with the pound buying just €1.26 compared to €1.46 this time last year – not to mention increased fuel costs pushing up the price of the holiday itself.

With repossession and unemployment figures both spiraling upwards and the predicted outlook for the economy looking even gloomier then ever, those who have to borrow to get through these tough times could be exposing themselves to even greater levels of risk if they have no means of maintaining their loan repayments should they lose their income through job loss, accident or illness.

A high proportion of consumers taking out personal loans still believe they are obliged to take their lenders’ PPI policy or go without. And as that can add huge sums to the cost of the loan, it’s tempting to take the risk along with the money and hope that nothing goes wrong.

“If they lose their income and can’t keep up the loan repayments, the effects will be felt for a long time whilst the holiday will be a distant memory,” he adds.

“For example, high street lender Alliance & Leicester would charge £28.27 a month - a total of £1,696.20 over the term of the loan - to protect a £5,000 loan over five years. Compared to a monthly premium of £5.53 from Paymentcare.co.uk – a total of £331.80 - for the same level of protection, that’s a saving of £1,364.40 – enough for another holiday!

“Make hay while the sun shines but don’t make a big mistake by risking it all in order to pay for it.”