Summer's just around the corner, so that means it's time to prepare for summer vacation. Whether you're staying close to home or traveling half way around the world, getting away from it all can be a great approach to resting and recharging--that is, until you get the bill.
According to American Express, most Americans tend to take some sort of summer getaway. Per its 2016 Spending & Saving Tracker, 80% of Americans planned summer travel last year and expected to spend about $941 a person on said travel.
A thousand bucks can be a lot of money, but that's when having a credit card can come in handy. True, it's wisest to save up the money for your trip before you go so that you're not paying off a weekend getaway for several years. However, it's not a bad idea to use a credit card to make summer travel purchases instead of using a debit card that's linked to your travel fund, meaning you use the money you've saved as you go instead of dipping into it when the bills come due.
There are two good reasons to use a credit card for traveling instead of a debit card or even cash. "When you're preparing to travel, you're going to be spending money, so you might as well be earning rewards," says Christine Forman, acquisition marketing director at Discover. "You earn them on every purchase."
Credit cards with rewards programs can give you a little bonus if you use them to pay for big-ticket travel purchases like plane tickets or hotel rooms because you do earn more rewards for these large purchases. Whether it's cash back or points, this strategy can help you pay off your credit card bill if you get cash back, or you can get points or miles to help book summer travel airfare or hotels. Then when the bill's due, you can pay if off with the money you've already set aside for the purpose of taking a summer vacation.
Credit cards also are a better option to use during a vacation for "peace of mind and security," says Forman. Cash can easily be lost or stolen, and when that happens, it's gone. If a debit card is lost or compromised, you might not be able to access any money in your bank account. Credit cards can offer purchase, fraud and liability protection. Some like Discover have a feature that allows you to temporarily freeze your account if you've misplaced your card and find it later, which saves the trouble of erroneously cancelling a card. Others offer travel or rental car insurance, which can save you from having to spend on those extras too.
As you book your travel, check to see whether your credit card has a shopping portal where you can get additional rewards for shopping online. Discover has Discover Deals, which has deals with several car rental companies, extra cash back rewards on cruises and extra cash back at Fairmont Hotels & Resorts. Citi has a similar portal called Citi Bonus Cash Center, which also gives extra cash back on online purchases at specific stores, including many travel categories like flights, hotels, car rentals and vacation packages.
One last way to use your credit card bonus to your advantage, especially if you get cash back, is to look into all the ways you can redeem your rewards. Discover allows you to redeem your cash back or apply it to your outstanding balance. You can also redeem cash back as a gift card, and in many cases, you're able to redeem cash back for a gift card worth more than your cash rewards.
For example, the card currently offers a $40 gift card to Enterprise Rent-A-Car for a $20 cash back redemption. Having a larger pile of cash rewards in your account can lead to more options where your cash back is doubled on the gift card, such as getting a $120 gift certificate for Carnival Cruise Lines for redeeming $60 of cashback rewards.
One thing to keep in mind is that while credit cards can be helpful tools in planning vacations and using them while traveling, it's also important to not charge more than you can pay back right away. Avoiding interest charges is the key to making sure your vacations remain happy memories instead of something that you're paying off for years.
