These days, people tend to favor using a credit card to make purchases. That’s because credit cards are able to extend our spending capacity by allowing us to buy things and then pay them later either in a lump sum or in installments. But what about when you’re traveling? Is using a credit card beneficial for travelers, or do they cause more harm than good?
Advantages of Using a Credit Card During Your Travels
1. Access to Online Deals
One of the advantages of using a credit card is that you are able to book cheap airline tickets and hotel reservations online. Many of these websites that offer discounted rates on flights and hotels will only allow you to book a reservation by using a credit card.
2. Extra Mileage for Upgrades and Freebies
Using your credit card to make purchases or payments allows you to earn points that you can use to avail of a list of products and services offered by your credit card company’s loyalty program. Some credit card companies have partnerships with airlines and car rental companies. These partnerships allow you to convert your loyalty points into miles that you can then use to either upgrade your airline ticket, or even book an airline ticket for free.
3. Using a Credit Card is Safer
Another advantage of using a credit card during your travels is that it is a lot safer than having to bring cash around. Currency exchange kiosks located within the city offer better exchange rates than those located in hotels, banks and airports. The problem of going to these kiosks is that you attracted unwanted attention from shady people who are always on a lookout for tourists having their cash exchanged to the local currency. Using a credit card when making your payments eliminates all of this.
4. Lump Sum or Installment?
If you spent just a bit over your budget while traveling, and you were using a credit card for all of your purchases, you don’t have to worry about paying this as a lump sum. Credit card companies give you 30 days to review all of your transactions. For as long as you have a good standing with your credit card company, you can call them during this review period and request to have the lump sum converted into easy installment payments. This way you will be able to pay for your bill and not incur any financial charges.
5. Easier Way to Get Reimbursed
This is particularly true for travelers sent by their company either to another city or country. In many cases, business travelers would have to pay first for their expenses and then have them reimbursed by the company. By using a credit card during your business trip, you will have a detailed account of the transactions you’ve made so that you can submit this to your company and have your expenses reimbursed.
Disadvantages of Using a Credit Card While Traveling
1. Good-bye Bargain Shopping
One of the huge disadvantages of using a credit card during your travels is that it is more difficult to do some bargain shopping. That’s because credit cards are only accepted in stores located in shopping malls or fixed establishments, and their prices here are pretty much fixed. If you want to get a really good bargain, you’ll have to go over to the flea markets where the only accepted form of payment is cash.
2. No Control when Using a Credit Card
Because of high credit limits given by most credit card companies, there is always that possibility that travelers can go a little bit crazy when using a credit card to make their payments since they don’t see just how much they are spending until they receive their credit card bill.
3. Huge Foreign Transaction Fees
Another disadvantage of using a credit card to pay for stuff while you’re traveling is the additional fees and charges that will be included in your billing statement. Many credit card companies charge a foreign transaction fee for payments and purchases you make, which can go as high as 3%. As if that was not high enough, the foreign transaction fee is charged every single time you’re using a credit card to pay or buy something.
4. Problems with Payments
If you are using a credit card issued by a local bank and you’ll be traveling for a long period of time, paying your credit card bill can be a problem. That was the case when I took a trip to New York a few years ago. To make sure that I get to pay my credit card bill on time (and not risk the embarrassment of it being denied when I went shopping), I had to make arrangements with my parents to pay my bill on my behalf. Since I didn’t have my bill with me, I had to first request for a copy of the bill to be emailed to me by the bank and then have the money wired to my folks before finally having it settled.
Verdict in Using a Credit Card While Traveling
There is no doubt that using a credit card does have its benefits when it comes to traveling. But like everything else, it is not perfect and can even be the root of future financial problems. That being said, it’s still beneficial to still carry some cash along with you while traveling along with your credit card.
So what do you think? Is using a credit card beneficial for travelers or not? I’d love to read your thoughts about it.Photo by Rev. Xanatos Satanicos Bombasticos (ClintJCL)