Travel credit cards have become very popular in recent years, offering a wide range of benefits if you use them wisely. From airline miles to hotel points and other travel-related rewards, these cards can help you save money and get more out of your trips. However, it is important to understand the benefits, drawbacks, and strategies for making the most of your credit card rewards while traveling.
Benefits of using credit cards during travel:
Many credit cards furnish incentives such as airline miles or hotel points, which can be advantageous in cutting costs on subsequent trips.
Additionally, credit cards frequently provide travel-oriented perks such as rental car insurance, trip cancellation insurance, and access to airport lounges.
Utilizing a credit card for travel expenses can also help in monitoring expenditures and adhering to a budget, making it easier to manage trip expenses.
In many cases in the United States, hotels will not accept a debit card for reservations or payment, so having a credit card can enable you to have more choices when it comes to lodging too. This is a primary benefit of credit cards' utility for travel.
If you would like to learn more about how to save on travel, this watch our Spend Less, Travel More recorded webinar on YouTube.
Drawbacks of using credit cards during travel:
Credit cards offer several benefits for travelers but there are also some drawbacks to be aware of.
One of the most significant drawbacks is the potential for high fees, including annual fees, and interest rates. If you only pay the minimum monthly payment on your credit card after a trip, the interest charges will accumulate over time, making your trip much more expensive in the long run.
For example, a $4,800 vacation funded through a credit card with 12% APR paying $425 monthly over 1 year would end up costing you a total of approximately $5,068.
Relying too heavily on credit cards while traveling can also make it harder to stick to a budget, potentially leading to overspending and financial stress after the trip is over.
Credit card fraud and identity theft can be a concern at any time, but it is particularly important to be cognizant of it while traveling
Strategies for using credit cards wisely:
When it comes to using credit cards for travel, there are many strategies you can use to maximize your rewards while minimizing potential additional costs.
One important strategy is to choose a travel credit card that offers rewards in areas that align with your travel habits.
Don't forget to take advantage of credit card perks like travel insurance and lounge access which are available through some travel credit cards. Always make sure to understand your benefits and plan how to leverage them when you can.
It's important to avoid high fees by choosing a card with low or no fees and paying off your balance each month to avoid interest charges.
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For credit card related modules, our Borrow course has Conscious Credit and Build Credit and our Protect course has Credit Secrets Revealed.