Browse Day: April 28, 2017

PERSONAL WEALTH ITCHY FEET, AGAIN?

You don’t have to be moneyed to travel the world. There are several schemes to meet your expenses. So just pack your

bags and hit the road

By Shailesh Menon

Illustration by Champak Bhattacharjee

BLUE BEACHESTake a dip in the

of Pattaya, walk along ‘Water­front Prome­nade’ in Singapore, go spotting orangutans in the Malaysian Borneo and hit the cool spice trail in Sri Lanka — there’s a lot you could do this summer. But if an empty wallet is stop­ping you from hitting the fair winds, at hand are some really cool deals to fund your dream holiday.

Before we smack the road analysing various travel financing options, one needs to be amply clear, it is best to dig into
your savings to finance your holiday. ‘Beg, borrow or steal’ is only good if you don’t have enough money to buy tickets, food and accommodation. Options that involve borrowing money to fund holidays could increase your travel costs by about 30 per cent. The other option — to steal — could land you in jail.

“Borrowing money to travel is not the best way to have a holiday… Not many people would opt for credit to travel. But if you don’t want to borrow, you should have enough sav­ings to dig in. If you don’t,
your only option is to travel on credit,” says Ravi Menon, head, Foreign Ex­change & Risk Manage­ment, Cox & Kings.

The Macros

For Indians, cost of travel has been moving in two directions. While billings for domestic travel have gone up 10 to 15 per cent over the past two years, international travel has become cheaper due to weakening of most for­eign currencies. The drop in travel costs is more pro­nounced in the case of Eu­ropean destinations, with airfare to marquee cities
such as Zurich, Rome and Paris crashing 15-20 per cent since last year.

Much of this (drop in air fare) has been attributed to a weak Euro, which de­clined from Rs 83 a year ago to about Rs 70.9 cur­rently. Consequently, most travel operators are seeing 50-60 per cent more bookings to popular Euro­pean hotspots this sum­mer. According to tour op­erators, India logs 15-20 million tourist departure every year.

Despite higher costs, do­mestic travel has been wit­nessing an uptrend over the past few years. Domestic travel (to all states com­bined) has been growing at 14 per cent every year since 1991. As per data from the tourism department, year 2012 witnessed a 19-9 per cent growth in domestic tourist visits over the pre­vious year.

Encouraged by robust growth in the tourism sec­tor, tour operators and lenders (mostly banks) have begun offering fund­ing options to prospective travelers. Credit card pay­ment modes, personal loans, travel loans and dedicated travel (savings) accounts are pushed to customers in large num­
bers. And much to the de­light of lenders and tour planners, middle class In­dians are warming up to such novel ideas.

Personal Loans t Credit Card Payment

Consumers can avail per­sonal loans for meeting their holiday expenses, but that is not a very lu­crative option as such loans are given out at rates as high as 16-18 per cent per annum. There­fore, most tour operators / travel portals have tie-ups with banks to facilitate travel loans.

“These (personal loans)

are unsecured loans, mak­ing them very expensive for customers. Also, dis­bursals take a lot of time,” explains Sreeram Sirip- uram, founder of Fly- 4credit, a loan facilitator.

If you do not want to undergo the painful pro­cess of getting a personal loan approved, you can simply swipe your credit card and purchase a holi­day package. But this op­tion could turn out to be more expensive (than per­sonal loans) if you default on card repayments; you could be charged as high as 36 per cent penal inter­est on the defaulted sum.

That said, credit card purchases give you great flexibility to plan your holiday. The payment for your holiday happens in­stantly (without the ap­proval of the bank, as is the case with personal loans), if you have suffi­cient credit limit. The re­payment is done through equated monthly install­ments (EMIs) over 12 months.

The flip side is, credit cards cannot buy you ex­pensive holidays as most middle-class card holders have credit limits in the range of Rs 1-2 lakh.