Should You Pay for a Vacation With a Credit Card? The Answer May Surprise You
by Brittney Myers | Updated July 30, 2021 - First published on July 29, 2021
Credit cards can be an excellent vacation tool if used wisely.
There's no shortage of experts who will be quick to tell you to never pay for something like a vacation with a credit card. And, well, they'd be right -- sort of.
While you should generally avoid taking on debt for your vacation, that doesn't mean you need to skip out on using your credit card entirely. There are actually a lot of advantages to using your credit card as your payment method, so long as you're smart about it.
For one thing, you should definitely save up the money for your vacation well before you pull out that handy piece of plastic. However, once your vacation fund is full to bursting, there's little reason not to trust in your favorite rewards credit card.
Credit cards can mean a more rewarding trip
This is arguably the best reason to use your credit card: the rewards. If you pick the right card, using it to pay for your trip could mean you can use credit card rewards to pay for the next one.
For example, say you have a great travel rewards credit card. Many of the top travel cards will offer bonus rewards on everything from flights and hotel stays to rental cars and tolls. This could equate to triple, quadruple, or even quintuple points on nearly every aspect of your trip.
Once you have the money saved for your vacation, you can charge everything -- just make sure to pay it off right away. So long as you pay off your vacation-related balances before your due date, most cards won't charge you a cent of interest. All the rewards, none of the debt.
Want to make it even more rewarding? Look for a nice big sign-up bonus. You can turn a couple thousand dollars in airfare and hotel stays into tens of thousands of rewards points -- which you can later turn into, well, a couple thousand dollars in free flights and hotel stays! It's the perfect cycle.
Enjoy all kinds of protections
Another great reason to choose your credit card at checkout is all the protections that come with most cards. For example, if you use a debit card to book a tour online, but the tour operator's site isn't that secure, your entire bank account could be at stake.
Credit cards, by law, limit your fraud liability for unauthorized purchases to just $50, and most cards take it further with $0 fraud liability.
Then there's the scam potential. Say you book a hotel that looks amazing online -- but turns out to be a complete dump. If the Bait-n-Switch Motel won't refund your cash, you're out of luck. But, use your card, and you may be able to get a refund through your credit card issuer.
And don't forget the trip insurance. Many premium travel credit cards offer varying degrees of trip insurance, which can include everything from lost baggage coverage to trip cancellation insurance.
In the event something goes wrong -- and let's face it, few vacations are entirely without mishaps -- your credit card could help you recover any non-refundable travel expenses that would otherwise simply disappear.
You can opt for interest-free financing
All right, so I started off by saying you should save up every penny of your vacation before you book anything. But what if you're simply a little behind on your goal? Or, what if some unexpected expenses crop up -- as they often do?
That's where 0% APR credit cards can be super handy. These cards come with promotional interest rate offers that give you the option to pay off your vacation expenses over time, without dealing with those pesky interest fees. A good intro-APR card will come with at least 12 months of 0% APR on new purchases, and some cards offer 18 months or more.
If you do take advantage of an intro-APR card, be sure you can pay off your balance before the introductory rate expires. Once the promotional period ends, your interest rate shoots up to the standard rate, which can get pricey with some cards. And remember that you still need to make at least your minimum payment every month, even if you're not accruing interest fees.
Hate the debt, not the card
There are many good reasons to avoid putting something like a vacation on your credit card. Nobody likes credit card debt hanging over their personal finances. However, there are just as many great reasons to use your card -- especially if you already have a stocked-up vacation fund.
In the end, credit cards are just a tool; if you misuse them, you can end up hurt. But use your cards wisely by paying them in full every month and avoiding high balances, and credit cards can be extremely useful and great ways to pay for your next vacation.
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