A travel credit card, with all its available credit, seems like a great way to fund your vacation. You get to have a great time in a new place and postpone the burden of paying for it. Using your credit card for your vacation can be beneficial, just make sure it doesn’t even up costing you more in the long run.
Use a travel credit card that will earn rewards.
Large-ticket items like vacations are a great way to earn rewards, especially if you have a travel rewards credit card. Look for ways to maximize your rewards, for example, by using your credit card issuer’s online booking tool. You might also opt to use your credit card while on vacation, too, especially if you can earn rewards on dining or other travel expenses.
Make sure you have enough available credit.
Before you enter your credit card number on the travel agency’s website, login to your credit card account to confirm you have enough available credit for your purchase. You don’t want to charge all the way up to your credit limit. Leave some room for any finance charge or recurring subscriptions that may hit your account before your next credit card payment.
Take advantage of a promotional rate if you can.
Lots of credit cards offer 0% promotional rates on purchases. By law, these promotional rates must last at least six months. If you qualify for a credit card with a 0% introductory rate on purchases, you’ll have a few months to pay off your balance and avoid paying interest on your balance. An interest-free vacation is almost as enjoyable as the vacation itself.
Pay off the balance as soon as possible.
Whether you qualify for a 0% promotion or not, it’s in your best interest to pay off your credit card balance as quickly as possible. If you don’t have a promotional interest rate, pay off the balance faster so you can minimize the amount of interest you pay. If you do have a promotional rate, aim to pay off the balance before the promotional period ends so you avoid paying any interest at all.
Brace yourself for your post-vacay credit card statement.
Between flights, rental car, dining, souvenirs, and other vacation-related expenses, you may not realize just how much you’ve put on your credit card. You might be surprised at the size of your credit card balance. Your minimum payment might also shock you, especially if you’ve never had a credit card balance that size. Once you get past the initial shock, take a look at your budget to figure out how much you can pay each month to pay off your balance as quickly as possible.
Using your credit card to fund your vacation can be beneficial, but make sure you can afford to pay it off. You don’t want to have to miss next year’s vacation because you’re still carrying around the balance from this year.