how to use credit cards

How To Use Credit Cards Responsibly When Traveling

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You probably have an idea of what travel budgeting is, but what if you’re going to use a credit card on your trip? Plenty of travelers prefer using credit cards instead of cash. And why not? Using a credit card certainly has its own advantages, and those advantages are what we will explore here.

First, we’ll determine whether a credit card is necessary when traveling. Next, we’ll then talk about the pros and cons of using one during a trip. With these, you will also learn how to use credit cards responsibly, especially when on a holiday.

Is a Credit Card Necessary When Traveling?

Honestly, no. You don’t need a credit card to travel. As long as you have a travel budget and stick to it, you’re going to be okay. Even so, that doesn’t mean that credit cards don’t offer welcome perks.

The Pros of Using a Credit Card While Traveling

Here are the three main advantages of using a credit card when traveling:

It’s good for emergencies.

In life, anything can happen. This statement becomes even more true when traveling to an unfamiliar country where you don’t know anyone or speak the language.

Having a credit card is an excellent backup plan just in case something goes wrong. With it, you won’t have to get stressed out when you need the extra money that your budget can’t cover.

When traveling, we always recommend a plan B by setting aside 10 to 20 percent of your total budget for emergencies. However, having a credit card on hand as plan C is always a smart move in our books.

It can give you travel insurance coverage.

Another perk that credit cards offer, especially travel ones, is travel insurance. Major credit card companies offer this as part of the package. Just make sure to keep in touch with your credit card company representative to determine what’s covered and what’s not.

It’s great to collect rewards for your next trip.

Finally, credit cards offer rewards that you can redeem on your next trip, allowing you to save as you’re spending.

The Cons of Using a Credit Card While Traveling

Here are the disadvantages of using a credit card while traveling:

There are a lot of hidden fees.

There are two things that credit card companies are notorious for, and those are hidden fees and overwhelming interest rates. Let’s talk about hidden fees first.

Did you know that most credit card companies have a higher transaction fee when used in foreign companies? Make sure you read your credit card’s fine print before using it so that you know how much you’re really paying.

You’re prone to theft.

One of the worst fears of a credit card owner is fraudulent activity. Unfortunately, it can happen anytime and anywhere, but most especially when traveling to a foreign country.

The RFID technology in your credit cards and IDs is there for your convenience. Unfortunately, it can also work against you. For this reason, we recommend using an RFID-blocking wallet to protect your cards from being scanned without your knowledge.

Then again, not all thieves are high-tech. Some still prefer simply stealing your wallet away. What’s worse is that it will probably be too late by the time you notice your wallet is missing. In minutes, they could have already swiped your card, and you’re left to deal with the debt trail left behind.

how to use credit cards abroad

It presents a higher risk of overspending.

Speaking of debt, it can be easy to overspend when using a credit card. After all, you can’t see with your own eyes what you’re actually spending. It’s just simple psychology.

The sad thing is, you can find yourself in bad debt after just a few missed payments due to the interest rate computation of your credit card company. It’s how they earn money, after all. They’re not charitable institutions that give away cash backs, rewards, and insurance coverage for free. It’s all business.

You cannot rely on a credit card alone.

Finally, while convenient, you simply cannot rely on credit cards alone. Not all establishments accept credit card payments. Some that do only honor local financial institutions. Having a credit card is a good supplementary to your travel budget; it’s not a replacement for it.

How to Use Credit Cards Responsibly During Travel

Here are tips to maximize yet responsibly use your credit cards during travel.

1. Look into any other perks that your card might be offering.

Some credit card perks come with monetary value, but what about those that don’t? With enough research, you’ll find credit card companies that offer other travel-related perks. These perks can include waived luggage fees, use of airport lounges, free food and drink vouchers, and more.

2. Have a backup card with you.

Most credit card companies require you to inform them if you’re going to use your card abroad anytime soon. It’s said to prevent your card from being declined during foreign transactions. The problem is, even if you do this, they can still get denied regardless. Hence, we always keep a backup card with us, especially if that’s our primary budget source when traveling.

3. Register everything to their respective online accounts and download the necessary apps.

It’s always great to have access to your cards’ mobile platforms. These apps usually send you notifications whenever your card is used. Often, you also get live updates on how your account is doing. There are even those that allow you to block your card in case of loss.

4. Use your backup card for temporary charges.

There are hospitality establishments, including hotels and restaurants, that require a credit card upon checking in. They do this to temporarily charge you for an amount they think you might spend during your stay.

This hold is a portion of your credit line that can severely impact your spending power during your trip. It is only temporary and will simply disappear after you checked out.

Wondering about your points and miles if you’ve used your backup card to check in? That’s simple. Just use your primary card to handle the bill upon checking out.

5. Use your credit card records to gain insight into your spending habits.

Do you spend a lot on food? Or, are you more prone to spend with abandon when shopping? It’s even more helpful if you have previously used the card on an earlier trip, preferably to the same destination you’re planning to go to.

It will give you a more accurate estimate of your possible total expense. Doing this will also show any unnecessary expenses that you can improve on during your next trip.

6. Set a spending limit and stick to it.

Give yourself a limit on credit card spending and stick to it. We understand that this takes a lot of practice and discipline, but those are not reasons to stop trying. Having a spending limit will also give you a red flag that you are already going beyond the budget. It can serve as a trigger to start minimizing or stop spending altogether.

Conclusion

Credit cards truly have a lot of advantages in store for you when traveling, especially when used strategically and responsibly. Of all the perks they offer, free travel insurance coverage is one of our personal favorites. After all, regardless of how safe you think your destination is, you can’t have too much protection.