Travel loan or credit card? Which is better?

Posted February 2025 by Kelly Scott

Tags: holiday loan , travel loan

Credit card vs travel loan - pros and cons

Planning an overseas trip is exciting, but figuring out how to pay for it can be tricky. Should you swipe the credit card or take out a travel loan?

Both can help you get there, but the right choice depends on how much you’re borrowing, how quickly you can repay it, and how much interest you want to pay overall.

Using a credit card for travel

Pros:

• Easy to book flights, hotels, and pay for things online.
• Some cards offer rewards points, travel insurance, or access to airport lounges.
• Helpful to have in case of an emergency.

Cons:

• Interest rates can be more than 20% p.a. if you don’t pay your balance in full by the due date.
• A high credit limit can tempt you to spend more than you planned.
• Paying only the minimum amount can keep you in debt for years.

Using a travel loan

Pros

• Unity travel loans start from 9.90% p.a. (secured), usually much lower than a credit card.
• Set repayments let you know exactly what you’ll pay, making budgeting easier.
• No early repayment fees, so you can pay off your loan faster if you want to.

Cons:

• You’ll need to make regular repayments until the loan is fully paid off.

Which option is right for you?

If you can clear your credit card in full within a month or two, a card might work for smaller travel costs.

If you’re covering overseas flights, accommodation, or a bigger trip, a Unity travel loan could be a good choice. You’ll have lower interest, fixed repayments, and no nasty surprises.

Personal loan floating interest rates range from 9.90% - 21.90% p.a. secured or 12.90% - 24.90% p.a. unsecured. Loan term 1 – 7 years. T&Cs apply. On drawdown a $200 application fee will apply. View rates & fees at unitymoney.co.nz.