Is work getting you down? Are you so overworked that you don’t have time for anything else? Are your weekends getting messed up because of work? Don’t worry! Most of us go through a similar ‘burn out’ phase at some point in our lives.
And what do we usually do when we are overworked? That’s right! We take a well-deserved break. Maybe a vacation to some place calm and serene. Sounds like a good idea, right? But, what if we do not earn enough to pay for this well-deserved vacation? Ah, we expected that answer! Your Credit Card sounds like a great option to finance your well-deserved, expensive vacation. But, is it really a good idea to do so? Well, let’s find out.
The Good
A Credit Card is a great payment option, especially when you are travelling. You can get a lot of travel benefits with your plastic mate. Benefits include lost baggage protection, concierge services, discounts on rental cars, free/discounted medical Travel Insurance, emergency assistance, reward points and other perks.
In addition to all the benefits mentioned above, these plastic buddies are probably your best option when checking into a hotel. Usually, hotels demand a deposit for any possible damages, which you will have to pay before checking in. If you don’t have a Credit Card, you will have to either pay by cash or put a hold on your debit card, which means you won’t have access to that amount until you checkout from the hotel.
Travel reward points are another reason to finance your vacation on your Credit Card. Every time you use your card to book your flight or hotel, you will earn points, air miles, or cashback from your travel provider. Sometimes, you may even get a free ticket. Awesome much?
Credit Cards are also safer and more convenient than carrying cash with you. You run the risk of getting pick-pocketed if you carry wads of cash on yourself. In this regard, carrying your plastic friend is a less stressful alternative to carrying cash, especially while travelling abroad.
Additional Reading: The Benefits Of A Credit Card
The Bad
The ugly side of using your Credit Card to finance your vacation are the interest charges that you may rack up. While it is advisable to use your Credit Card for booking your tickets and accommodation, using your card to finance your entire vacation spells trouble. If you are the type who never pays your Credit Card bill in full, you are going to be attracting high interest charges, which will eventually increase the cost of your vacation. Even the travel benefits that you may have received from using your card will be overshadowed by these interest charges over time.
Another pitfall of using your card while on a holiday is over-spending. Most people take just one international vacation in a year or every couple of years. So, they are likely to be tempted to overspend. Charging your Credit Card for every purchase you make abroad could lead to a negative impact your Credit Score. First of all, you are going to be using a high percentage of your credit limit. Secondly, if you do not clear your bill in full, you are going to attract high interest charges every month. Sounds scary, right?
Additional Reading: Tips To Deal With Credit Card Debt
What should you do?
Since we have discussed the pros and cons of using your Credit Card to finance your vacation, let us now find out how to use one wisely. First and foremost, you shouldn’t go into debt just because you went on a vacation. So, you need to enjoy the benefits of your card wisely. Set a realistic budget for the trip beforehand and stick to it. Ideally, your budget should be in line with your savings.
Secondly, you should use your Credit Card only for booking your flights, accommodation, or a rented car service. These provide the most benefits compared to other services. For your meals and other purchases, you should use cash as much as possible. This will help you avoid piling up debt on your card. Simple, isn’t it?
Additional Reading: Credit Card Management
Bottomline
A Credit card makes a great travel buddy. However, you need to use it with caution. Financing a part of your vacation via your Credit Card makes sense. But, if you plan on using your card to take care of every single expense while on vacation, then you better be prepared to pay off a huge bill once you return home. Remeber that if you plan properly, you can use your Credit Card to your advantage.