JUN 24, 2011
Are you working hard to make smarter use of your credit cards? Maybe you limit your credit card use to big-ticket items, and pay off the balance quickly. Perhaps you avoid using your card for items that are quickly consumed, like gas or groceries.
Those are all good credit card habits – ones that can help your credit score. But when it comes to paying for your summer travel plans, using a credit card, – rather than carrying lots of cash or your ATM card – may be the smartest move.
Before you start your trip, you should decide on a budget, including how much you’ll spend on travel arrangements and incidentals. Then, consider these credit card tips:
Book with a Card
Booking your airfare, hotel or rental car online is commonplace these days. You could use your debit card to pre-pay, but a credit card can offer you more protection. For example, if there’s a mix-up with your reservation and you arrive at the hotel only to discover they’ve billed you for two rooms instead of one, you can dispute the charge with your credit card company. If you’ve paid by debit card, the money will be gone from your account and you’ll have to negotiate directly with the hotel to get it back.
Safer than an ATM Card
One of the most common credit card tips is that you should never take a cash advance from your card because interest rates on advances are often very high. But carrying your ATM card on a trip is like taking the entire contents of your bank account with you. Smart crooks can clean out your account if they get their hands on your card, card number and/or PIN. Credit cards, on the other hand, offer many layers of theft protection. Carrying only what you need is one the best ways to prevent identity theft while traveling.
So if you find yourself unexpectedly in need of cash while on vacation, it may be safer to take a small cash advance from your credit card. Just be sure to repay it right away so you avoid the high interest rates.
Of course, you’ll need to carry some cash for incidentals, like that souvenir refrigerator magnet you just couldn’t pass up. But for attraction tickets, meals and other significant expenses, stick with your credit card. Your purchase will be more secure and, if you’re traveling abroad you’ll likely get a better exchange rate than you would if you went to a bank and exchanged U.S. dollars for the local currency.
To make sure you stay within your travel budget, take 10 minutes every evening to tally up the receipts from that day’s credit card purchases. Keep track of how much you’re spending.
Finally, when you’re home you will need to pay off your credit card charges as quickly as possible. Remember, a good payment history shows up on your credit report and accounts for a significant portion of your credit score.