When it comes to travel, I’m a big fan of maxing out your credit card. Your credit card’s benefits, that is. After all, we’re spending big bucks on our getaways—Americans shell out, on average, 10 percent of their annual income on vacations, and a quarter spends 15 percent or more, according to LearnVest’s Money Habits and Confessions Survey.
Using your credit card in a smart way can offset some of that holiday spending with perks—from free checked bags to priority boarding and access to a swanky airport lounge—as well as help you avoid some common travel hassles. Here’s how to get the most from your plastic when you’re hitting the road:
Get the Right Card for You
Everyone’s travel styles are unique. Do you set your sights on far-off flights to Bali? An airline-specific card might give you the most bang for your buck. Do you enjoy resting your head at night on fancy sheets? It may pay to align with a hotel-chain card and get lower rates for expensive rooms, provided there are properties in locations you’d be excited to visit. Whichever you choose, do it carefully and sparingly: Every time you open a new line of credit you trigger a “hard inquiry,” which could affect your credit score. And if you’ll be carrying a balance, calculate whether the interest will outweigh the amount you’ll save.
Reap the Benefits
We all know about using points to pay for flights and hotel stays. But don’t forget the softer perks—free admission to museums and reimbursement for luggage that’s been lost or stolen, for example. Most major cards will offer these, while some smaller ones may not, so ask the issuer.
Avoid Foreign Transaction Fees
They sneak up on you. The typical amount you’ll pay is 3 percent of every purchase you make while overseas—and that adds up, fast. If you prefer international jet-setting over domestic jaunts, a card with no foreign transaction fees is worth prioritizing.
Use ’Em or Lose ’Em
If you’ve had travel reward points kicking around for over 18 months, check the fine print of your card’s policy. Some cards will actually cancel them if they haven’t been redeemed within a certain period. Ditto if you’re considering closing an account (a tricky move for your credit history): Make sure you’ve used all of your points first, as you could lose your hard-spent perks.