What is a holiday loan?

A holiday loan is a short-term loan from lenders such as commercial banks or credit unions. Holiday loans are not pay day loans or cash advance loans which have high interest rates.

How do holiday loans work?

Holiday loans can be used for anything from vacations, as a gift for vacations, to ease stress over the holiday season and even for student tuition fees.

To consider (negative points/ risks)

  • These loans may have a higher interest rate than a secured loan.
  • Can increase the cost of the overall holiday due to the interest charges.
  • Applying for a few different loans, if not accepted by the first, will have a negative impact on your credit score.


  • Could make the holiday season a lot less stressful by spreading the cost.
  • These loans tend to be lower in APR than credit cards with a fixed interest rate and term.
  • It won’t drain your savings.