Thursday, May 19, 2022, 10:07
Long-haul flights can be too expensive to pay for in one payment.
Vacation, work, study, family visit. Whatever the reason, a trip abroad today can easily require $150,000, $200,000 or $300,000 just for airfare. Then will come the accommodation, insurance and various other expenses to fatten the budget. Is it still possible to pay all this in installments? Yes, but not in the traditional way.
In recent years, Argentine travelers had gotten used to financing this type of consumption with a credit card in 6, 12, 18 or 24 payments, which in some cases were even offered without interest.
But last November, to discourage departures from the country, the Central Bank applied a new trap and prohibited airlines and travel agencies from continuing to grant this facility. Since then, the portals only show the chance to pay by card in one payment.
However, despite this, distributing the expense in many installments is still possible. There are different types of loans that can be used and even a maneuver that avoids interest.
the continuation, four options available to pay in installments for a trip abroad, how they work and their costs.
Sanitary measures are no longer an obstacle to leaving the country, but you have to be able to pay for it. Photo: Enrique Garcia Medina.
Option 1: refinance the card
It consists of paying the travel expenses with the credit card in one payment. But without the intention of paying off the total debt the following month, but rather to refinance it, always complying with what is required of the minimum payment.
In this way, you can access plans of 6, 12 or 24 fixed installments in pesos with interest rates that are regulated and that, although they rose, remain at more attractive levels than those of the market.
Last week the Central Bank set the maximum annual nominal rate (TNA) for refinancing of up to $200,000 at 53%.
What if the sum spent was greater? On the surplus, the issuer can charge interest up to 25% higher than that of a personal loan, which can give TNA levels of around 84%? depending on the bank.
You cannot pay in installments with a card as before, but you can refinance the balance after the purchase. Photo: Bloomberg.
Option 2: request a personal loan
With this tool you can access much larger amounts and terms. There are banks, for example, that allow you to request personal loans for all destinations of up to $3,000,000 or $5,000,000, and repay them in terms that can reach 5 or 6 years.
Interest rates vary according to the entity that lends and the term chosen. On average, according to data from the Central Bank, the TNA has been around 59%, although there are banks that charge certain clients more than 70%.
This is a financing alternative that travel agencies, faced with the new stocks, began to promote. Despegar, for example, began offering 100% digital personal loans from Efectivo Sí directly on its site, allowing the traveler to choose the amount of installments and the day of the month on which they will be paid.
“We seek to facilitate the possibility of managing a personal loan to hire a trip. This option already existed, but what we did was unify the channel, reduce time and facilitate the management process”, said Paula Cristi, general manager of Despegar for Argentina and Uruguay.
Thus, when paying for their trip abroad, the customer can now select whether to do so with cards in one payment or by taking out a loan. “The rates (TNA) will be in a range of 53.99% to 99.99%”, they detail.
The option to request a personal loan, now integrated into the payment options on the Despegar website. Image: Capture.
Option 3: pay cash and pay later
The modality consists of making the purchase of the trip abroad in one payment without the need to use a credit card, and then requesting a quotation for that consumption. This allows you to recover what was paid instantly, taking a loan for the amount spent.
This way of buying is not suitable for all pockets since it requires first having all the money for the operation in an account. First you pay and then -either right away or months later- the return is requested with the financing.
Some fintech companies offer this alternative with amounts, terms and rates that can vary greatly depending on the credit profile of the applicant. In Ualá, for example, TNA rates range from 30% to 95%.
In the case of Decrypto, a few days ago it began offering a Visa prepaid card that allows you to pay for all types of consumption -including trips abroad- and then pay them in up to 12 payments, which can be interest-free if the holder keeps cryptocurrencies as collateral in his virtual wallet. In addition, they return 3% of the purchase in cryptos.
The blocking of the quotas was added to the 65% surcharge that weighs on all the expenses that are made in foreign currency to travel. Photo: AP.
Option 4: join a “miles club”
This is a trick that many travelers began to use in order to continue buying flights abroad with their card, in installments and without interest. It is about subscribing to “miles clubs”: programs that do not grant credits to issue tickets, but rather facilitate and optimize previous savings.
The main airlines have mileage plans so that their customers, as they fly, add points that they can later redeem for free tickets. But certain programs go a step further, offering the traveler to join a “club” to receive a certain number of miles each month, even if they don’t travel.
For this you have to pay a monthly subscription with the credit card. And the higher the subscription amount chosen, the more miles will be credited every 30 days, and the shorter it will take the traveler to reach the desired ticket. With which, indirectly, these clubs offer a legal way to pay tickets in installments with the card, without financial surcharges.
Why would it be convenient to save like this for a ticket instead of, for example, buying dollars? Among other reasons, because being a member of a club gives access to exclusive promotions and discounts.
Some clubs offer to pay the subscription in pesos; others, in dollars. And, when buying a ticket, if the miles accumulated are not enough, they offer to purchase it by combining points with money (pesos or dollars).
What are the “mileage clubs” that work in Argentina? Club Smiles, which offers plans between $950 and $14,400 per month. And Club Latam Pass, with memberships available at US$18 or US$50 per month. /Clarion
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