Australians rack up an average of $2000 on their credit cards while on holiday.
Australians rack up an average of $2000 on their credit cards while on holiday. JULIAN SMITH

After jet lag you may face debt lag

I DO love a catchy new phrase, and this one made me laugh. "Debt lag” is a new one for me.

It seems that as Chrissy approaches we plan a holiday, but don't quite get around to saving for it.

So some two million of us turn to our credit cards on vacation, and cop a nasty case of debt lag!

Among the holidaymakers who return home with a maxed out credit card, half clear the slate within three months.

But the remainder can take over a year to clear the slate.

Taking a credit card on vacation provides a handy back-up if you run low on the folding stuff.

And let's face it, vacations tend to see us splurge on things we wouldn't even think about buying at home (a colleague of mine is still questioning the pineapple- shaped slippers she picked up in Hawaii).

There's no problem with a bit of overspending - if you can afford it. After all, holidays are meant to be enjoyed. The trouble is, Australians rack up an average of $2000 on their credit cards while on holiday, and unless you can pay off the balance immediately the mounting interest charges could leave you cash-strapped well into 2018.

The key to avoid blowing your vacation budget is to plan how much you'll spend and how you'll pay for it all.

Doing plenty of online research can give you an idea of the costs you're facing, and from here it's easier to set daily spending limits.

Where possible, aim to book and pay for accommodation, tours and even entry to attractions before you leave home so you're not facing inflated tourist prices. Surprisingly, the most cited rip-offs mentioned by Australian travellers are not dodgy souvenirs that fall apart before you reach the airport.

Rather, credit card and ATM fees plus mobile phone roaming charges are among the biggest gripes.

Yet these can be controlled.

Read the fine print of your credit card and/or travel card to understand any fees you may be slugged with.

When it comes to phone charges, either purchase an add-on pack with your local telco - it's likely to be far less costly than pay as you go roaming, or ditch your local SIM altogether.

Picking up a prepaid SIM at your destination can be a low cost way to stay connected while you're away.

- Paul Clitheroe

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.