3 Reasons I Always Pay for Vacations With a Credit Card

Whenever I go on a vacation, I use my credit card to pay for the cost of the trip. There are three important reasons why I insist on charging every aspect of the vacation, from hotels to flights, rather than paying for it from my checking account. Here's what they are.

1. My credit card offers various kinds of insurance for travel

Like many travel credit cards, one of mine offers many different kinds of protections in case things go wrong on vacation. Specifically, the card offers:

• Auto rental collision damage waiver: This provides reimbursement if a rental car is stolen or damaged in a crash.
• Trip cancellation or interruption insurance: This allows me to get reimbursed if my trip is canceled or cut short for a covered reason such as bad weather or unexpected illness.
• Trip delay reimbursement: If there's a delay of 12 or more hours or a delay that requires an overnight stay, my card will reimburse me for unexpected expenses like meals and a hotel.
• Travel accident insurance: If the worst happens, my card would provide accidental death or dismemberment insurance.
• Reimbursement for lost luggage: The card would pay for checked or carry-on luggage, and its contents, if it gets lost due to a carrier's mistake.
• Baggage delay coverage: When a suitcase is delayed for six or more hours, this covers up to $100 per day in incidental costs for a period of up to five days.

These insurances could come at a big cost if I didn't have them through my card. The rental car insurance alone could be around $10 to $30 daily. And, if I didn't buy these protections independently, I could be left facing even bigger out-of-pocket losses if something went wrong.

If you travel regularly, you should have a card that offers these kinds of benefits. You can save money on insurance premiums while making certain you still have the right protections in place. Chase travel cards tend to offer a great suite of benefits, but there are also other great travel cards that provide insurance coverage to cardholders that are worth looking into.

Just be sure to read your card's fine print, as you usually must pay for the entire car rental or trip on the card to get these coverages.

2. I can earn rewards for my vacation spending

Paying for a vacation with a credit card also makes sense if you can get extra rewards for your travel spending. This is one of the main reasons why I use my travel card for all vacations. Travel purchased through the card issuer directly allows me to earn 5 points per $1 spent and when points are redeemed for travel, I get a better value for my redemptions.

If I can earn points that end up giving me as much as $0.026 of value by booking my trip on a credit card, that's a lot better than paying out of my bank account and getting nothing back. If you book trips regularly, you should also look for a card that will reward you for it.

Think about whether a general purpose travel card that gives you bonus points for all vacation-related purchases is a good choice for you, or whether you might be better off with an airline card that gives you extra points for miles or a hotel card that gives you extra points for lodging. The right card will depend on what your biggest travel expenses are, so review your recent trips to see where most of your money is going.

3. I can better track what I'm spending on trips

Finally, when using a credit card, I get a record of all my purchases in the form of my card statement. I can import this into a money management program like Mint and see how much I'm spending on travel in total. Since I like to keep track of where my money goes, but don't necessarily want to write down every purchase I make on vacation, this is a big benefit. If you also want to get an idea of where your money is going, using a travel card to pay for vacations can be helpful.

Just remember, you'll want to pick the right card, take full advantage of the insurance it offers, and pay off your balance in full so you don't get stuck paying interest that makes every vacation you take costlier.