Credit cards often come in handy when traveling on vacation, but using them to fund your entire trip in lieu of using actual savings is a dangerous decision. If you’re in desperate need of a vacation, don’t fall into the tempting trap of paying for your trip with credit cards. The following reasons explain why it’s best to use savings for your upcoming vacation:
1. You’ll Rack up Interest Charges
When using your credit card for a vacation, it’s easy to go overboard putting everything on the card. However, if you don’t already have the money to pay for this vacation, using credit cards for your vacation expenses is guaranteed to rack up serious interest charges. Long after your vacation ends, you’ll find yourself paying off your debt for months to come.
While you may convince yourself that you’ll soon be able to save up the money you’re spending right now, you must account for the interest rates as well. If you’re planning to pay down your debt by paying the minimum amount every month, it’s best to avoid using your credit card altogether.
2. Everything Adds Up
Paying for a flight or hotel room to a credit card so you can take advantage of the benefits isn’t a bad idea, as long as you have the money to pay off the charges immediately. However, if you’ve decided to charge your travel expenses indiscriminately to your credit card regardless of whether you can pay it off or not, you’ll find that these expenses add up quite quickly. If you have to use a credit card, experts from White Mountain Partners suggest keeping track of every single expense you charge to your card. This way, you’ll know exactly what you need to pay back as soon as your vacation is over.
3. You’ll Go Into Debt
Putting together a vacation budget is the best way to pay for a getaway. This budgeting won’t only help you set aside money for traveling but will make sure you avoid going into debt on any upcoming trips. By planning several months in advance, you’ll have the time to build a healthy vacation fund. When the time for your vacation rolls around, you’ll have more than enough money for any costs you incur during your trip.
4. You’ll Ruin Your Credit Score
Credit cards can come in handy on vacation if you have a healthy credit score. If you get into the habit of paying for vacations you can’t afford with credit cards, you’ll find yourself in a mountain of interest and debt. Though you can eventually pay down this debt, getting into this situation in the first place will take a toll on your credit score. With a low credit score, you will miss out on any credit card reward points you could otherwise take advantage of.
Avoid using credit for vacations you can’t afford as a way to protect your credit score and the potential to earn bonus points. Once you build a healthy credit score, you’ll have access to an ample amount of reward points you can use to travel. White Mountain Partners shares that credit cards like American Express Platinum offer users membership reward points that can be used to offset travel expenses.
While you can easily book a flight and lodging accommodations in a matter of seconds using a credit card, this split-second decision can have lasting consequences. Keep this information in mind as a reminder to start saving up for your future vacations
