Saving for holidays

Holidays are the ultimate luxury. They are a chance to relax, recharge the batteries and catch some time away from the busyness of everyday life. Everyone goes on holiday, whether in the UK or abroad, and the holiday industry is one of the largest in Britain.

A chance to get some time with the family, catch some sun and read a good book is coveted by many. Perhaps your idea of a perfect break is to experience some of the world’s best and most diverse nightlife or check out some of the most historical and beautiful locations across the world. Whatever your idea of a perfect holiday is, many of us spend hours dreaming and planning our perfect trips.

Holidays, though, cost money. Flights or travel, hotels or accommodation, spending money and entertainment are all needed for a good holiday and it all costs. Spending your hard-earned money on time away is a good investment, creating memories and giving you a chance to unwind. Many people already save towards their annual break, allowing them to make the most of their time off; but there are some helpful tips that will help you to make the most of your savings and give you a little more to spend on your holiday.

By placing your savings in an option with the best interest rate, you will be accruing more money for your investment, allowing you more money to spend on your time off. It is always important to look at the best savings interest rates available as it will give you a little extra money that will all add up and could be used for an extra drink, meal out or adventure when you go on your holiday.

Firstly, ISAs will allow you to earn a little more money on your savings as ISAs do not take a percentage of your interest as tax. The government allows each saver to save up to £5.300 per year without being taxed on the interest. This leaves more money in your pocket (or your bank account) ready to spend and treat yourself while on holiday. ISAs can be very helpful when saving for holidays, but different banks offer varying rates of interest on their ISAs. While all banks will offer an ISA, it is worth shopping around to find the best ISAs and most attractive interest rates available, therefore maximising the return on the savings you invest in the account.

Another helpful ISA tip is to decide whether you would like to keep it variable or fixed. Variable ISAs will change in their interest rate as the Bank of England base rate changes. The plus side of these accounts is that you will be able to deposit or withdraw money whenever you like (up to the amount of £5,300). This option would be perfect for the impromptu holiday goer who likes to book last minute and have adventure sprung upon them. A variable ISA would leave the money available for whenever you decided to jet off on a last minute adventure.

However, if you are a little more meticulous in your holiday planning, a fixed rate ISA may be a better option. Fixed rate ISAs deal with specifics. They require the investment of up to £5,300 upfront. The money will then be locked for a period of one to five years, depending on your requirements. The account will also lock the interest rate, meaning that it will not fluctuate during its lifetime. This is perfect if you find a good interest rate, as the interest will be fixed for the full term. However, you will incur a penalty should the money be removed from the fixed rate ISA early for any reason. If you are the kind of holidaymaker who likes to plan ahead and know exactly when and where you are going in advance, a fixed rate ISA will keep your money untouched, ready to be used on the perfect holiday. The added interest with these kinds of account will also leave you with a little bit more money to enjoy your holiday with.

If you do not have the investment to make upfront in fixed deals, then a monthly saver may be the best option for you. A monthly saver deal is an account offered by most banks and will allow the saver to place a standing order into the savings account each month, so you can add to your savings each time you get paid. These types of account are perfect if you find saving hard, as the money will leave your account automatically after payday and will soon start to accrue in a more preferential rate savings account. It will not be long before you have enough money in the account for your holiday, and you will barely even notice the savings leave your current account in the first place. The monthly saver will help you to save if you are notoriously bad with setting money aside for a holiday, allowing you to save over time towards your goal of a perfect vacation.

There are many banking options that will help you to take a step closer to your dream holiday, and give you a little extra spending money for when you get there. Speak to your local bank, be aware of promotions, posters and leaflets you are given by other banks and check the internet for the best savings deals; it will not be long before you are relaxing in the sun, all thanks to the money you have put away.