Financing a Vacation with Your Credit Card: A Double Edged Sword

Financing a Vacation with Your Credit Card: A Double Edged Sword

When you are planning a vacation, it’s likely you will also be thinking about the best way to finance the trip. According to financial experts, you should endeavor to save the entire amount needed for a vacation and pay cash.

In the absence of proper planning, using your credit card to finance a vacation can lead to huge debts in the long run. Besides, charging the travel expenses on your card will make the vacation more expensive since you have to pay for the interests on your balance.

However, a credit card can be the perfect source of funds for a vacation depending on your financial management strategies.

The disadvantages of using a credit card to pay for your vacation
Most people discourage the use of credit cards to fund vacations because it’s easy to overspend. Even when there is enough balance to cover the expenses, you can be tempted to spend beyond your means. The situation becomes worse when you have a card that comes with attractive rewards every time you use it to make payments.

Today, most cards have high credit limits as well as huge interest rates. Without discipline, it’s easy to spend amounts that you won’t be comfortable paying back. If something happens and you are unable to pay on time, the interest rates can wreak havoc on your credit profile. In addition, most credit cards on the market today come with annual fees and late payment fees. All these could make a vacation quite expensive.

But if you find that your credit card debt is continually growing, you can take a personal loan to consolidate the debt. Here, you get just right loans with better terms than what the credit company is offering you and you end up saving lots of money. In addition, if you’ve had multiple cards with outstanding balances, everything will be paid in full and you’ll only be left with one payment to make.

Using a credit card as a tool when planning a vacation
Interests charged on a credit card balance can make any vacation unaffordable and the associated fees charged on the unpaid balance can damage your credit profile. When you accumulate more credit card debt, the interests can get quite high and it’s easy to get trapped in a cyclic debt.

Since this can happen to anyone, financial advisors insist that you avoid using the plastic money for a vacation. However, others will tell you it is okay to use it when an emergency strikes. Nevertheless, it’s important to understand that it’s the irresponsible use of credit cards that cause financial problems. This means there are ways you can use them and gain much. 

Basically, a credit card offers high security than a debit card or cash when you are traveling. If you happen to lose the money when in transit, chances are that you will go through a great deal of trouble. In addition, it’s difficult to deal with dishonest sellers when you are paying cash because you won’t be able to challenge the payment.

Unlike credit cards, a debit card can expose your finances to a high risk. When you transact using the debit card, the money is usually withdrawn from the account immediately you make a purchase. Although you can get a refund if the transaction is fraudulent, it usually takes time.

Travel credit cards are great for saving money
Besides being a safer option, getting a credit card that is meant for travel can be a good move if you want to save money. In the process of vacation planning, it’s good to start looking for a card with the most competitive travel rewards and benefits.

If you use a credit card that gives you points or cash back when you spend on restaurants, and airfare means you will be paying less money for a vacation. However, you must commit to using your credit cards responsibly.

To make sure you won’t be spending more than is necessary, it’s prudent to save the entire amount before charging it to the card. This will make sure that when the time to pay the credit card balances, you will simply take the saved amount and pay.

While travel credit cards come with attractive reward points, this shouldn’t make you spend beyond your vacation budget. Besides, the points are not to be used as an excuse to keep spending. Some people think that having multiple credit cards can act as a safety net on a rainy day. The truth is that opening many credit cards can damage your credit scores and if you use multiple cards to make purchases, it can be difficult to track the payments. In addition, you won’t be accumulating meaningful points.

Choosing the right credit card
Before you decide to put your vacation expenses on a credit card, it’s important to ensure that you are fully committed to responsible use of plastic money. The only way you make meaningful savings as well as reap maximum benefits is by choosing the most appropriate card.

There are multiple cards designed for travelers and they offer, airline rewards, redeemable points for free accommodation at specific hotels, and cash back on some expenses. Some won’t charge any fees in the first year of use but the best feature is zero foreign transaction fees. When choosing a card, consider your top priorities during a vacation and what you intend to be using the card on. It’s also good to settle for a card with latest security technology to avoid fraud.

Final words
While it’s important to make a decision whether you’ll be using a credit card to pay for vacation expenses, it’s critical to know why you are making the choice. It’s therefore wise to make a choice that will be beneficial to your life and make your vacations better.
If you can’t save enough cash for the intended vacation, you’d rather downsize to a plan that is affordable and avoid debt and financial stress. Since most international merchants don’t accept cards without the EMV chip, it’s important to ensure you have one before boarding the plane.