Paying for Travel, Vacations and Children's Sports: Cash, Card Points and Your Policy

Paying cash is a sound habit. If you charge a trip to your credit card, collect the points and pay the full balance by the due date, you owe the card issuer no interest. Canadians spent $50 billion on tourism outside the country in 2025, and $22.8 billion of it went to leisure visits overseas, according to a Statistics Canada study released on 22 July 2026.

So the question here is narrower than whether to borrow for a vacation, and more useful: before your cash pays the card, where does it wait, and what does it do while it waits? The answer decides what a trip really costs you and where you rebuild the reserve afterwards. Children's sports raise the same question, because their bills also arrive in lumps.

The figures below form one illustrative example, with its assumptions shown: a trip of $15,000, a savings account at 2.5%, a card at 19% and a policy loan at an assumed 6.5%. In interest alone, paying from savings is the cheapest route. The reasons you might still route the cash through a participating whole life policy are set out with their costs and conditions. I am paid by insurer commissions when a policy is bought. Reading costs you nothing.

Two different decisions sit inside this question. If you already own a suitable participating policy with cash value, the comparison is simple: this loan against your other money. If you are thinking of buying a policy mainly to pay for trips, the interest table cannot make that case. First decide whether you need permanent life insurance and can carry its premiums for many years. That decision comes before any trip, and a policy is not something to buy to pay for this year's trip.

Why is paying cash only half of the decision?

Because cash has a cost too. Paying cash means giving up whatever that money was earning. The other half of the decision is where the cash waits before you spend it, since that decides what you give up and where the money is rebuilt afterwards.

R. Nelson Nash, who first described the concept at the centre of this practice, put it in one sentence: you finance everything you buy. If you borrow, you pay interest. If you pay cash, you give up the interest that money would have earned. In his framing there is no third route where money costs nothing. The guide to opportunity cost explains the principle in full, and the other money principles apply it to other decisions.

If you pay cash, you have already avoided the heaviest cost. Interest at 19% on a carried card balance is one of the costliest ways to pay for a trip, and you never pay it. What remains is quieter: the earnings your cash gives up when it leaves.

Travel makes that quieter cost worth a closer look, for three reasons.

• It can repeat. You might replace a car every several years. If you travel, you may do it every year, sometimes twice, and a small cost repeated for twenty years becomes a large one.
• It can be large. For five people, flights alone can reach several thousand dollars before a single night of lodging.
• It leaves nothing behind. A trip is spending, not an asset. That is no criticism, because time with your children matters. It means that whatever the money gives up on the way out is pure cost.

This is where Infinite Financial Sovereignty® comes in. It does not ask you to travel less or to stop paying cash. It asks where your cash lives between trips, and where you rebuild that reserve after each one.

How do you use the card without paying any interest?

Charge the purchase, keep the points and card benefits, and pay the full balance by the due date, inside the grace period that protects new purchases. Avoid a cash advance for a trip: it has no interest-free grace period.

Used this way, a credit card is a payment tool, not a loan you keep. Points, travel coverage and other benefits differ from one card to another; the choice of card is yours, so read your own card's terms.

The rules that matter are set out by the Financial Consumer Agency of Canada on its page How credit cards work (modified 15 October 2025). Federally regulated financial institutions must provide a grace period of at least 21 days. You pay interest if you do not pay the balance in full by the due date, and you keep paying it until the balance is paid in full. The grace period does not apply to cash advances, cash-like transactions or balance transfers. The Agency gives 19% on regular purchases and 22% on cash advances as example rates.

Two points follow if you pay cash.

• Every route keeps the points. The card is paid in full each time, so points are not a reason to prefer one source of cash over another.
• The due date is the deadline for your cash, wherever it waits. A transfer from savings takes whatever time your institution needs, which you can check in advance. A policy loan takes business days, on the insurer's timetable. Plan backwards from the due date, and leave room for a holiday or an incomplete request.

Where can your cash wait before it pays the card?

In three places: a chequing account, a savings account, or the cash value of a participating whole life policy. They differ in what they earn while the cash waits, how that is taxed, how fast you can reach it, and what happens after you spend it.

The side-by-side view below gives no rate for the policy, because policy values belong to a specific contract.

A savings account held inside a Tax-Free Savings Account changes the tax column of the savings row. The Canada Revenue Agency says on its page What is a TFSA (modified 17 September 2026) that contributions and income earned in the account are generally tax-free, even when you withdraw. One timing rule matters for a trip. Under the CRA's page on withdrawing from a TFSA (modified 20 February 2026), the amount you withdraw is added back to your contribution room only on January 1 of the next calendar year. Putting it back in the same year without enough room is an over-contribution, taxed at 1% a month for as long as the excess stays. A TFSA and a life insurance policy do different jobs, and questions about registered plans belong with a professional licensed for them. The comparison below assumes a non-registered savings account.

The policy is life insurance first. Its cash value is not an account, and you cannot write a cheque on it. The Autorité des marchés financiers describes a policy loan as borrowing with the insurance's cash surrender value as collateral, repaid with interest, and subtracted with accrued interest from the insurance paid if you die before it is repaid. You reach the value in one of two ways, and the difference between them is the heart of the matter.

• A withdrawal (a partial surrender) takes value out of the contract for good. It can reduce the death benefit, and under subsection 148(4) of the Income Tax Act part of it can be taxable, because only a prorated share of the adjusted cost basis is set against it. Money paid in later is a new premium or deposit, not a reversal.
• A policy loan leaves the cash value in the contract, pledged as security. The insurer advances its own funds, charges interest that is paid to the insurer, and deducts any unpaid balance from the death benefit until you repay it.

For a cash payer, the loan works as a bridge. It pays the card on time. Then the monthly amount you would have saved repays the insurer instead of refilling a savings account.

How does the step-by-step sequence work?

Charge the trip, request the policy loan the same week, pay the card in full before the due date, repay the insurer every month from your cash flow, then decide what the monthly amount does once the loan is clear. Five steps, in that order.

Step 1. Charge the trip to the card. You collect the points and any card benefits, as you always do.

Step 2. Request the policy loan the same week. The request goes to the insurer, which checks the loan value available and the contract's requirements, such as the consent of an irrevocable beneficiary or of a creditor holding an assignment. Ask in advance which form it uses and how it pays the funds. They take business days to arrive, which is why the request goes in right after the purchase, not near the due date.

Step 3. Pay the card in full before the due date. If the loan arrives in time and the whole balance is paid, the card costs nothing in interest, just as when you pay from savings.

Step 4. Repay the insurer every month. Set the amount you would have put aside to pay cash for the trip, and make it automatic. In the example below that is $1,250 a month, which repays $15,000 and its interest in 13 payments.

Step 5. Decide what the monthly amount does next. When the loan is repaid, the borrowing room the contract allows on that value is open again for the next trip. If you keep paying $1,250 a month into the policy as an optional deposit, where the contract has room, the cash value grows and so does the room to borrow later. A repayment and a deposit are different transactions; ask the insurer, in writing, to apply each payment as you intend.

Interest, repayment and tax on the loan itself are explained in how a policy loan actually works.

What does the arithmetic look like on a $15,000 trip?

At an assumed 6.5% loan rate and $1,250 a month, the policy loan costs about $553 in interest, paid to the insurer. Paying from savings that earn 2.5% and rebuilding them gives up about $203 of interest before tax. The same payments on a card carried at 19% would cost about $1,770.

Illustrative example, comparing interest only, not the total cost of owning a policy. Every figure is an assumption chosen to show the arithmetic, not a quote from any insurer, card issuer or institution. Interest is calculated monthly on the declining balance. Your contract may charge interest differently, for example once a year on the policy anniversary, which changes the figure.

Three observations matter more than the numbers.

First, the savings route costs the least interest. In this example, drawing savings and rebuilding them gives up about $350 less than the policy loan costs. Tax widens the gap. If the savings interest would have been taxed at an assumed 40% marginal rate, the after-tax interest given up is about $122. The loan interest is not deductible for a trip, so the $553 is paid from after-tax income; at the same assumed rate, keeping $553 after tax takes about $921 of income before tax. A claim that a policy loan always costs less than paying cash does not survive this arithmetic.

Second, carrying the card is by far the most expensive route here. Moving a carried balance from 19% to 6.5% saves about $1,217 on one trip. If you pay in full, this row is not yours; it is there so the other two can be read in proportion.

Third, the routes leave you in different places. After the last payment, the savings route leaves the account rebuilt, if you actually rebuilt it. The policy route leaves the loan repaid and the cash value still in the contract. Whether that difference is worth about $350 more in interest is a separate judgment.

If savings cost less interest, what does the policy route offer instead?

Less than it first appears. If you own the policy and keep it either way, its values keep developing whichever route pays for the trip. What the loan changes is narrower: you pay interest to the insurer, the loan may change the dividend on the value securing it, and your savings stay free for something else.

When you spend savings, the money leaves, and the account rebuilds only if you deposit money back.

When you take a policy loan, the cash value is not withdrawn. It is pledged as security for the insurer's advance. The contract continues: guaranteed values keep increasing on the contract's schedule, any dividend the insurer's board declares is credited under the contract's rules, and the life insurance stays in force, with the loan balance deducted from the death benefit until repaid.

That is why the policy's growth is not, by itself, a reason to borrow: the same values would have developed in the same way if you had paid for the trip from separate savings and left the policy alone. Compare only what differs. Two facts shape it.

• Dividends are not guaranteed. The Autorité des marchés financiers says on its page on participating whole life insurance that dividend amounts are not guaranteed and that the insurer may reduce them. The amount credited while a loan is outstanding is therefore not a known figure you can set against a known interest cost.
• Some contracts credit borrowed value differently. Ask the insurer, in writing, whether an outstanding loan changes the dividend credited on the part of the cash value that secures it. The contract's terms are set at issue; future dividends and the dividend scale are not.

There is also a difference of structure. A savings account has no schedule: nothing tells you to put the $15,000 back. A policy loan has a balance printed on each statement until it is repaid. For some people that visible balance is the discipline they want. For others it changes nothing, and for them the savings account is simpler and cheaper. Both answers are sound.

Why must the policy be filled before it can be used?

Because a loan can only be made against cash value that already exists. In the early years, depending on the design, much of each premium goes to the cost of insurance and the insurer's expenses, so the loan value is small. A new policy can take several years to hold enough for a large trip.

A policy is not a credit line that opens on the day it is issued. It is life insurance whose cash value has to be built before anything can be borrowed against it.

Nash called this building the system before using it, and he was blunt about it: people want to use the policy before they have put enough into it. A policy bought in January may hold little to borrow against by July.

If you travel a lot and pay cash, the conclusion is uncomfortable but useful. In the first years, money you would have spent on travel may have to go to premiums instead. A new policy can have some loan value sooner, especially after an eligible extra deposit, but it may fall far short of a trip budget, so ask the insurer for the maximum loan available at each date you plan to travel. If buying the insurance would mean using this year's trip money, do not count on the new policy for this year's trip. During that first phase you have three choices:

• Postpone one large trip and put that year's travel budget toward the policy's premiums and deposits.
• Split the budget. Take a shorter or closer trip and put the difference toward the policy.
• Keep paying for trips from savings or income for now, and fund the policy from other money until its cash value can carry a trip.

None of these is painless, and that is the test. If you are not willing to give up anything in the first years, you are not ready to route your travel money through a policy, and it is better to know that before buying one.

How does a deposit option speed up early cash value?

A deposit option lets you pay more than the base premium, and the extra buys paid-up additions, which carry cash value from the start, although depending on the contract that value can be less than the amount deposited. A design with a large share of optional deposits builds loan value sooner than one built mainly on base premium, within limits set by tax rules.

A participating whole life policy has a base premium due on its schedule. Some insurers also offer a rider that accepts extra deposits. Those deposits buy paid-up additions: small blocks of fully paid life insurance that carry their own cash value and can themselves earn dividends.

One example is Equitable Life of Canada's Excelerator Deposit Option (EDO), which it publishes in its advisor material. It is named here only because its rules are published and specific, not as a recommendation of any insurer. Under the November 2025 version of those rules, each deposit carries an 8% premium load for commissions, premium tax and administration, skipped deposits do not carry forward, and no payment is accepted that would make the policy lose its tax-exempt status.

Four points matter if you plan to route your travel money this way.

• Design decides the early years. Two policies with the same total deposit can show very different cash value in years one to five, depending on how much goes to base premium and how much to optional deposits. Ask for the illustrated cash value and loan value year by year, not only at age 65.
• The room is limited. The exempt test in the Income Tax Regulations limits how much can build up in a policy relative to its coverage, and an insurer can refuse a deposit that would make the policy fail it. You cannot pour unlimited money into a small policy.
• Unused room may be lost. Under some riders, a deposit skipped this year cannot be made up next year. What a participating contract can take away covers this in detail.
• Timing can change the price. Depending on the insurer, a deposit option can price an addition differently according to when in the policy year the deposit is paid, or how often. Ask how the timing of your deposit affects what it buys.

An optional deposit can shorten the wait, by an amount that depends on the design, the deposits and the dividends declared; it does not make a new policy ready for this summer.

What changes when your travel spending reaches $60,000?

The principle stays the same; the stakes grow. In a first phase, travel money goes partly or wholly to premiums and deposits. In a second phase, each trip is charged to the card, cleared by a policy loan and repaid monthly, so your repayments reopen borrowing room in the policy instead of refilling a savings account.

Illustrative example. Suppose your household's travel for five people adds up to $60,000 over four trips of $15,000. Whichever route pays for them, the trips are spent. What differs is where you rebuild the reserve afterwards, and what it costs.

The idea behind Infinite Financial Sovereignty® is to change the route of the money, not the destination of the trip. Here is how the $60,000 looks in two phases, with the same assumptions as above.

Phase one: filling. Travel money is redirected, wholly or partly, into base premium and optional deposits until the loan value is large enough to carry a trip on its own. How long that takes depends on the design, the deposits and the dividends actually declared. For a new policy it can take several years.

Phase two: paying through the policy. Each trip is charged to the card, cleared by a policy loan and repaid at $1,250 a month from your cash flow. At that pace each loan takes 13 payments, so the example spaces the trips at least 13 months apart. With one trip every twelve months, the loans would overlap by about a month. Over the four trips, the interest paid to the insurer comes to about $2,210.

The order is the same as for one trip, four times over. What differs is the position afterwards: in phase two the policy keeps its cash value in the contract through every trip, the life insurance stays in force, and the monthly habit built in phase one keeps running. Whether that is worth about $1,400 more interest than the savings route depends on the same three things as for one trip: the loan interest, any effect of the loan on the dividend, and every loan being repaid in full.

How can children's sports be paid the same way?

Sports bills arrive in lumps: registration, equipment, tournament travel. The card, the loan and the monthly repayment work as they do for a trip, under the same conditions and risks, and each loan should be cleared before the next registration.

A Solutions Research Group survey of 2,996 parents with at least one child aged 3 to 17, conducted in January 2023 and published on 26 June 2023, found that families with teens aged 13 to 17 reported spending over $2,500 a year per child on organized and casual sports and activities, about twice the average of $1,227 for a child aged 3 to 7. Its summary puts spending for families with children in equestrian, hockey or skiing at about twice the average, $3,600 to $4,350. Travel and transportation took 30% of annual spending. Financial worries in general, not only about sport, were mentioned by 58% of parents.

Illustrative example: three children in competitive sport, with $7,500 of the season's costs falling due in August and September. Use your own invoices.

The mechanics are identical to the trip: charge the registrations and equipment, request the loan at once, clear the card within the grace period, then repay monthly through the season so the loan is cleared before the next registration. Paying for both travel and sports this way needs a larger policy and a stricter calendar, because two loans may be outstanding at once.

One caution is specific to sports. In the survey above, spending for a teenager was about twice the spending for a young child, and a child who changes sport or level can change the bill. Build the repayment on the season you are paying for, not on the one you hope for, and keep it going until the loan is cleared, even if a child stops partway through.

What does repaying on your own schedule require?

A monthly repayment you treat as seriously as a lender's schedule. Nash went further and suggested repaying more than the loan and its interest, with the extra going into the policy as deposits where the contract allows it.

Depending on the contract, a policy loan may have no fixed repayment schedule. The Autorité des marchés financiers is plain that it is still a loan: the amounts borrowed and the interest have to be repaid eventually, and whatever is owed at death comes off the insurance paid. That freedom on timing is real, and it is also the trap. If you owed $15,000 to an outside lender, its schedule and its consequences would keep you paying. Owing the same amount to the insurer, with your policy as security, you could be tempted to skip a month, then another.

If you already pay cash, you have an advantage here: you were going to put the money aside anyway, and only the destination of the monthly amount changes. Nash's advice was to treat a policy loan with more respect than any outside loan, not less. In practice that means three habits.

• Set the repayment before the trip. Decide the monthly amount and the end date when you request the loan, and set up an automatic payment.
• Pay at least what a lender would ask. Where the contract allows it, anything above the loan and its interest can go into the policy as an optional deposit, within its limits.
• Keep the habit when the loan is cleared. The $1,250 that repaid the loan can become an optional deposit, if the contract has room and your budget still carries the required premium.

The story of Nash's twin sisters shows the same idea with a car purchase, and how the result depends on where the payments go.

Does this change for an incorporated professional?

The personal trip stays personal. A corporation that pays for a shareholder's vacation can give a taxable shareholder benefit, and the same question arises if a corporate asset, such as a policy the corporation owns, is used for a personal expense. Settle it with your accountant first.

If you are an incorporated professional, such as a dentist or a physician, surplus cash may sit inside your professional corporation. That money is the corporation's, not yours. A family vacation paid with it is generally taxed in your hands, for example as a shareholder benefit under subsection 15(1) of the Income Tax Act or as a dividend. The Canada Revenue Agency's page on shareholder benefits (modified 10 June 2025) says such benefits can take almost any form and explains how the corporation reports them on a T4A slip. Corporate ownership of a policy does not, by itself, make its value taxable to you; the question arises when corporate money or a corporate policy is used to give you a personal benefit.

A policy loan on a corporate policy is an advance from the insurer to the corporation. Getting that money to you is a second transaction, such as salary, a dividend or the repayment of a shareholder loan, with its own tax. The worked example assumes a policy you own personally, paid from money you have already received personally. Which entity should own a policy, and how corporate money reaches you, are questions for your accountant and your lawyer (in Quebec, your lawyer or notary). For the corporate side of the same thinking, see a dental professional corporation and its retained earnings.

What are the tax rules on a policy loan for a vacation?

The interest is not tax deductible, because a vacation is personal spending. A policy loan is also a disposition for tax purposes: the part of the loan proceeds above the policy's adjusted cost basis just before the loan is income in the year you receive it. Ask for the basis before each loan.

Two tax points apply to every vacation or sports loan.

The interest is a personal cost. The Canada Revenue Agency's page on line 22100 (modified 20 January 2026) lets you claim most interest on money borrowed and used to try to earn investment income. A trip or a hockey season earns none, so the loan interest is paid with after-tax money, exactly like card interest.

The loan can create taxable income. Under section 148 of the Income Tax Act, a policy loan is a disposition of an interest in the policy. The part of the loan proceeds above the adjusted cost basis immediately before the loan is income in that year, and the loan lowers the basis. In the early years of a well-funded policy the basis can be higher than the loan, so no income arises, but that changes over time and differs for every contract. If part of a loan was taxed, repaying it can give a deduction under paragraph 60(s) in the year you repay, up to the amount previously included; it is a deduction in that year, not a refund of the earlier tax. Repayments also add back to the basis, within limits the Act sets.

The practical rule is simple. Before each loan, ask the insurer for the current adjusted cost basis and an estimate of any income it would report, and confirm the result with your accountant.

What can go wrong when trips are paid through a policy?

The largest risk you control is repayment. An unpaid loan grows as interest is added, reduces the death benefit, and can end the policy if it overtakes the value securing it. Timing, rate changes and non-guaranteed dividends add risks you can plan for but not remove.

• The loan is not repaid. Depending on the contract, unpaid interest is added to the loan and then bears interest itself, so the balance grows faster each year. If the loan and interest overtake the value securing them, the policy can end after the notice the contract provides. That ending is a disposition: it can create income to the extent the proceeds, which take the outstanding loan into account, exceed the adjusted cost basis, in a year when money may already be short. A premium lapse reinstated within the period the Act allows is not treated as a disposition; whether that can apply to a contract that ended because of a loan is a question to put to the insurer and your accountant in writing.
• Trips overlap loans. Booking the next trip before the last loan is repaid stacks one debt on another. While trips keep coming, the balance does not clear and the borrowing room does not reopen.
• The money arrives late. A policy loan takes business days. If it misses the card's due date, card interest can apply. Request early.
• The rate changes. The insurer sets the loan rate and, depending on the contract, can change it. The 6.5% here is an assumption, not a promise.
• The death benefit is reduced. While a loan is outstanding, the balance and accrued interest come off what your beneficiaries would receive. If your family needs every dollar of that coverage, keep loans small and short.
• Dividends are lower than hoped. A plan that only works with a particular dividend is fragile.
• The policy is abandoned early. A policy cancelled in its first years can return less than was paid in. If you are not sure you can keep the premiums going for many years, do not start.

What should you ask before the first trip loan?

Ask the insurer how the loan rate is set, how interest is charged, whether a loan changes the dividend, how much is available, how long requests take, how deposit timing is priced, and what the adjusted cost basis is. Ask yourself whether you will repay on a schedule.

Questions for the insurer and your representative, in writing:

1. How is the loan rate set, and can it change?
2. Is interest charged monthly or on the anniversary, and what happens to unpaid interest?
3. Does an outstanding loan change the dividend credited on the value that secures it?
4. How much can I borrow today, is there a minimum loan, and are any consents needed?
5. How many business days are requests taking now, and how are the funds paid?
6. If I make optional deposits, does the timing or frequency of a deposit change what it buys?
7. What is the adjusted cost basis today, and what income would you report on the loan I have in mind?
8. How are you paid on this policy, and by whom?

Questions for yourself:

1. Have I finished filling the policy, or am I still in the first phase?
2. What is my monthly repayment, and when will the loan be cleared?
3. Will this loan be cleared before the next trip or season?
4. Do I have an emergency fund outside the policy?
5. If I am incorporated, has my accountant confirmed which money pays for the trip?

How should you read these figures?

No real loan rate, dividend scale or cash value appears above, because those belong to a specific contract from a specific insurer and change over time. Every rate is an assumption chosen to show how the routes compare. In interest alone, in this example, a policy loan costs more than paying from savings; any case for the policy rests on the points that differ, not on the interest. To test your own numbers, replace each assumption with the figure from your statement, your card agreement and the insurer's written answers, and run the same comparison.

Who this does not suit

This approach does not suit you if you carry debt you cannot pay down, have no emergency fund outside the policy, or could not keep premiums going for many years. It does not suit you if you want to travel from the policy in its first year, or if, being honest, you would not repay a loan that no one schedules for you. And it does not suit you if you are content with the savings route; that is a sound choice.

It can suit you if you already pay cash for travel or sports every year, need permanent life insurance, are willing to give up something during a first phase of building the policy, and want to rebuild the reserve for those expenses inside a contract you own rather than in a savings account. If that describes you, start with the self-check on the Becoming a Client page.