Living There
Travelling is expensive and only getting more so. Airlines are surcharging for a seemingly endless number of items from baggage, to check-in to leg space; gasoline is at record highs, insurance is costing an arm and a leg (and that’s before you’ve even broken an arm and a leg), and a hotel breakfast is now more expensive than a Michelin star dinner.
The good news is, there’s a tool you may already have in your wallet that’s a gateway to travel savings – your credit card. That’s right, aside from points and miles, your credit card can help you save boatloads of cash when on the road. So here are a few tips to help you find the best credit card to help you go on holiday a whole lot faster and cheaper.
- Sign-Up Bonus: The first place to look for help from your credit card is the sign-up bonus. Many credit cards offer 25,000 to 60,000 points to incent people to apply for their cards. There is no quicker way to fly free than finding a healthy sign-up bonus. Think about it, if you get 1 point per $1 spent, you would have to spend the equivalent of $25,000 to get 25,000 points. Why bother when you can get the same just for applying for the card. Many sign-up bonuses are good enough for one round trip flight!
Many times banks require you to spend a minimum amount within 3 or so months, to ensure you actually use the card before getting the bonus. Just make sure it’s a threshold you can afford. There’s no point in signing-up for a card that requires $5,000 in spend in the first 3 months, if there’s no chance of you doing so.
- Points: The good credit cards give you more rewards per dollar spent than the bad ones, we call this the earn rate. Find yourself a card that provides you the maximum earn rate for your type of spend. As an example, you may find a travel card that gives you 4X points at the gas pump and grocery store very attractive if you drive and have a family. Or, if you go out a lot, perhaps you’d find a card with 4X points at restaurants more valuable. In general, the higher your income and credit score, the more elite credit card you’re eligible for. The highest value propositions tend to earn around 2% per dollar spent and you should never accept less than 1%.
- Insurance: This is the benefit that most people just don’t take advantage of enough. Did you know many travel cards offer trip cancellation, trip interruption, baggage insurance, travel medical insurance, and car rental insurance as included benefits. That means you may protected for all of the above insurances without having to pay an extra penny! Insurance savings alone can add up to $1,000 in annual savings. For many, especially those who travel frequently, this feature alone is reason enough to get a premium travel credit card.
- Foreign Exchange Fees: When you use your credit card out of country, you are usually charged the spot exchange rate, plus a foreign transaction fee of 2.5% by the issuing bank. Truth is, that’s actually not that bad when compared to the 8%-10% fees you can pay at foreign exchange bureau’s in airports and hotels. But increasingly, many issuers are offering travel rewards credit cards without any foreign transaction fees! That means, you’ll essentially be getting the same foreign exchange rate that all of Visa or MasterCard’s volume can get you.
- If you travel by car, camper or RV, gas can be one of your most expensive costs. Find a credit card that gets you 5% cash back or 4X points on gas. Many cash back credit cards offer a better earn rate than co-branded gas credit card themselves.
We hope this has convinced you that your travel rewards credit card offers a host of benefits and perks that you can take advantage of so you can go on vacation sooner and cheaper!
