How to Make Your Dream Vacation Real with Credit Cards
In today’s stressful world, a vacation is no longer a luxury but actually a necessity. Whether you travel solo or with a bunch of family or friends, a vacation can be a balm to your soul. However, it can also burn a hole in your pocket if you aren’t careful with your expenses. This can take away some of the joys of your vacation. You may also be putting off going on a vacation because of the lack of funds or the fear of going way over your budget.
No matter where you are in your journey to making your vacation come true, did you know that you can make it a reality in a more pocket-friendly way just by using your credit cards? Here’s how to do just that!
Select the right card:
if you are a person who loves travelling once in a while or you want to travel full time, you can make your dreams come true using credit cards if you plan ahead. Credit cards fall into different categories based on the target audience. For example, there are cards that offer attractive rewards for spending on everyday groceries, entertainment, dining, fuel purchases, etc. There are also cards that are exclusively targeted at the travel sector. Some are co-branded cards with airlines or hotels. Look for these cards with exclusive travel rewards, discounts, air miles, and other privileges.
For example, if you choose a credit card that offers air miles for every transaction you make, and if you use that card for your everyday financial transactions and expenses, then you are slowly building up your next discounted or even free airline ticket for your next vacation! The savings that you get on an airline ticket can be enough money to spend on other things while traveling or even just to save or invest for your next dream vacation (like in a Systematic Investment Plan, or SIP, maybe?).
Maximize your rewards
Do your research and compare credit cards based on the bonus points you get for renewing the card or for spending above a certain threshold. Look out for cards that allow you to cash in or redeem your bonus points for travel vouchers, airline tickets, hotel accommodation, and other travel-related categories.
Accumulate points
The points that you accumulate on your travel credit card can be redeemed against travel-related products and services. So, it would be smart to use the credit card as much as possible for the transactions that get the maximum points and keep accumulating those points until you have enough to redeem them against the reward of your choice. Study the credit card information or brochure to find out which categories of spends attract the maximum rewards and use your credit card for those.
Redeem at the correct time
It is wise to always keep an eye on the last date for redeeming your reward points, bonus points, or cashback so that you don’t miss the date and waste all of your rewards. It may also be wise to pick the right season to travel. Traveling during the off-season may help you make the most out of your reward points whereas traveling during the peak season may result in your points being used for much less, ending up with you paying more out of your pocket. Avoid this by monitoring your rewards points and redemption dates from time to time.
Spend smart but pay credit card bills fully and on time
Don’t forget to pay your credit card dues on time within the payment due date though. If you rake up credit card bills that are way above what you can pay back in full, and end up only paying the minimum due every month, very soon you could find yourself facing a mountain of debt because of the accumulated interest, which can be up to 36% per annum for some cards.
It is also important to ensure that you keep your credit card spends within the credit utilisation ratio so that your credit score doesn’t get affected.
Not paying your credit card bills on time, paying only the minimum due resulting in increasing credit card debt, and spending over the credit utilisation limit will only result in your credit score taking a hit and your debts piling up, rather than your savings. This would only set back your travel plans rather than push them forward.
If you keep all the pointers given above in mind when using your credit cards, it would be easier and quicker to save on your dream vacation and making it come true and you should be good to go!
