“Before the credit crunch and dramatic fall in house prices many people would have relied on remortgaging as a way of raising cash to fund their lifestyle, but those days are long gone and unlikely to return,” says Andrew Hagger of MoneyNet. “For those who have no savings, no prospect of extending their mortgage and no-one they can approach to lend them money, there really isn’t anywhere left to go.

“Admitting defeat on such a sensitive subject as money can be very difficult, but there’s no honour in going down with a sinking ship. Facing up to financial problems as early as possible is the only way of stopping things from deteriorating. Money is one of the biggest sources of arguments between couples so racking up interest on loans and credit cards in secret is a sure way of compounding the problem with relationship difficulties too.”

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“Everyone likes to win a prize, but you may have to attend a lengthy presentation with a barrage of confusing information, where you are pressured into parting with thousands of pounds for something you might not even want – without the chance to think it over,” warns Lorna Cowan from Which?

“Many people are very happy with timeshares,” says Susan Marks, consumer affairs officer at Citizens Advice. “But we’ve all heard lots of horror stories. Don’t claim it unless you want to undergo several hours of high-pressure selling.”

“Ignore suggestions that the special offer may not be available later on,” adds Ms Marks. “And never make a payment upfront to clinch the deal on a timeshare. If the sales rep asks you to do so, they are acting illegally.”

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“The credit crunch has prompted a flight to safety by borrowers who have been stung by dramatic rises in the rates on short-term deals,” commented Sean Gardner, director of MoneyExpert.com. “At the same time lenders are increasingly keen on signing customers up to long-term deals which offer them certainty.”

Gardener added, ‘Early redemption charges on long term deals tend to be more substantial than shorter fixed term mortgages. In some instances you can be hit with a charge of 13 percent of the value of your loan - which on a 150,000 pound mortgage would mean paying 19,500 pounds to get out of the deal.’

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Virgin Money spokesman Grant Bather said: “Everyone needs to keep their spending under control as the credit crunch and soaring inflation take a big bite out of household budgets. Pre-paid cards remove the temptation to run up debt while you’re on holiday as you can only spend the amount that is loaded on your card. They’re a good discipline to get into to avoid the risk of the sun going to your head and burning up your bank balance on holiday.

“And they can be more secure to carry than cash as if you lose the card you can get a replacement sent out. Plus if you really do lose control of your finances relatives or friends can load the card up with emergency cash.”

Michael Coogan, CML director general, commented: “Cost and availability to customers has not improved. And this in turn means that consumers are now beginning to give up and demand is falling, with confidence in the housing market falling with it. It is not too late to take steps to address the fundamental problem, which is the lack of funding available through wholesale mortgage funding channels.”

Alan Clake, an economist with BNP Paribas stated, “Just because the markets and central banks’ primary focus has moved more heavily towards inflation is not to say that households’ and firms’ experience of the credit crunch has passed its worst - rather the opposite. Falling house prices are aggravating demand and supply of credit. The effects on growth are likely to persist for some time to come.”

Martyn Hocking, editor of Which? Money, stated: “We often spend ages finding a great value holiday, but then forget about getting the best deal when it comes to our spending money. Don’t assume that commission-free means you’re getting a good rate - shop around or you could find yourself paying over the odds.”

Sean Gardner of MoneyExpert.com added: “Withdrawing cash from an ATM or over the counter whilst abroad can be the most convenient way of getting hold of your money. It’s also safe and simple. However, most people will have to pay for the privilege and some will pay considerably more than others. With the pound currently very weak against the Euro, unnecessary fees are the last thing holidaymakers need.”

Sean Gardner, of MoneyExpert, a comparison website, said: ÒOf course, nobody would advise that you selected your mortgage provider based on how many flights to Rome, cases of wine or free haircuts youÕll get. But with a rate of 5.89 per cent over three years the Airmiles mortgage is amongst the most competitive.”

It is also recommended that homeowners avoid putting up home equity to secure a holday loan. Melanie Bien, a financial analyst stated, “You may need to open a current account and meet certain benchmarks. They will take into account your assets and wealth, particularly investable assets as opposed to the value of your home. If you have lots of equity in your home but nothing else, this may present a problem.”

As the housing crisis continues, experts are urging some consumers to rethink getting a holiday loan this year. While this type of financing is general cheaper than relying on credit cards to finance a holiday, right now is not the best time to get low rates on a holiday loan. As banks seek to reduce the amount of risk they are carrying, few are interested in offering holiday loans at this time. This may create a problem for some consumers, but most will appreciate being able to avoid high interest rates and strict payment terms.

Drew Wotherspoon of John Charcol stated, “Whilst the mainstream market is basking in a moment of encouragement, there are worrying statistics coming from S&P on the UK’s sub-prime borrowers. They have revealed that more than a fifth of these borrowers have fallen behind with repayments. Of course this is only to be expected with the market as it is, but there is a clear message for these consumers - don’t bury your head in the sand. Talk to your lender; they have a duty of care to help you with your situation and it is much better to keep them informed than to just ignore your financial commitments. Ignorance is most definitely not bliss.”