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by Fundevity Research Department
April 16, 2023Reading Time: 5 min

Pros and Cons of Travel Credit Cards: Is It Worth Getting One?

How to Choose the Best Travel Credit Card For You

Are you a frequent traveler or planning to embark on your next adventure soon? If yes, then you must have heard about travel credit cards. With numerous benefits such as earning miles, cash back offers, and access to exclusive perks like lounge access and hotel upgrades, these cards seem too good to be true.

But are they really worth it? In this article, we will explore the pros and cons of travel credit cards so that you can make an informed decision before signing up for one. Let’s balance the benefits with the risks.

What Are Travel Credit Cards?

So what are travel credit cards?

Travel cards are easy, convenient and say way of buying foreign currency and taking it with you when you travel internationally. The traveling cards are in prepaid format and you will have to preload a card with one currency or multiple currencies depending on your travel.

It is worth mentioning that a normal credit card is not the same as a travel credit card. A normal credit card gives you rewards in form of cash back or points which can be redeemed for gift cards, merchandise, and discounts. A travel credit card offers travel-specific benefits.

How Do Travel Credit Cards Work?

When you use a travel credit card, you are essentially borrowing money from the credit card issuer to pay for your travel expenses. You will then need to repay the borrowed amount, plus interest and any fees, to the credit card issuer.

There are a few different ways that travel credit cards work. Some cards offer a set number of reward points for every dollar you spend on the card. These points can then be redeemed for travel expenses, such as airfare, hotel stays, or rental cars. Other cards offer a percentage back on all of your travel purchases, which you can then use to offset future travel expenses.
No matter how your travel credit card works, it’s important to understand how interest and fees can impact your overall costs. For example, if you don’t repay your balance in full each month, you’ll be charged interest on the outstanding balance. And if you’re late with a payment or go over your credit limit, you may be charged additional fees.
By understanding the pros and cons of travel credit cards, you can make an informed decision about whether or not one is right for you.

Pros of Travel Credit Cards

There are many benefits to using a travel credit card. Perhaps the most obvious benefit is that it can help you save money on your travel expenses. With the right card, you can earn rewards like cash back or points that can be redeemed for free or discounted travel.

Another big benefit of using a travel credit card is that it can help you stay organized and keep track of your spending. When everything is consolidated into one place, it’s easier to see where your money is going and spot any potential problem areas. Additionally, many cards offer helpful features like automatic bill pay and alerts that can help you stay on top of your finances while you’re on the go.

Finally, using a travel credit card can also help build your credit score. By making timely payments and keeping your balance low, you can give your score a boost which may come in handy down the road when you’re looking to apply for loans or other lines of credit.

Cons of Travel Credit Cards

There are a few cons to using travel credit cards that should be considered before signing up for one.

First, if you don’t pay your bill in full each month, you’ll likely be charged interest on your purchases. Additionally, most travel cards have annual fees ranging from $95-$450, so you’ll need to make sure the benefits of the card outweigh the cost of the fee.

Finally, if you’re not careful with how you use your card, it’s easy to rack up debt that can be difficult to pay off. If you’re not disciplined with your spending, a travel credit card may not be the right choice for you.

How to Choose the Best Travel Credit Card For You

If you’re looking for a travel credit card, there are a few things to consider. First, what type of traveler are you? Do you travel often for business or pleasure? Do you always pay your balance in full, or carry a balance from month to month?

Second, what are your spending habits? Do you prefer to book your travel directly with airlines or hotels, or do you use third-party booking sites? Do you tend to spend more on airfare, hotels, car rentals, or activities while on vacation?

Third, what are the terms and conditions of the card? Does it have an annual fee? Is there a foreign transaction fee? What is the interest rate on the card if you carry a balance from month to month?

Once you’ve answered these questions, you can start comparing travel credit cards and their benefits. For example, some cards offer bonus points for every dollar spent on travel-related purchases. Others offer free checked bags or priority boarding. And still, others provide concierge services or trip delay protection.

Choose the card that offers the best mix of benefits and perks for your individual needs and spending habits. And remember, even the best travel credit card won’t do you any good if you can’t pay your balance in full each month.

Conclusion

Travel credit cards are a great way to maximize the benefits of your spending and earn rewards for travel, but it’s important to remember that they come with risks as well. Make sure you understand all the pros and cons before making any decisions about opening or using a travel credit card.

Remember, only use these cards if you can afford to pay off your balance in full each month and stay within your budget so that you don’t find yourself overspending. But with careful consideration and good financial management, you can make the most out of a travel credit card without putting yourself at risk.

FAQs

Q: What are the benefits of using a travel credit card? 

 Travel cards offer a number of benefits including rewards points, perks, and protection. When used responsibly, they can help you save money and make your travel experiences more enjoyable.

 Q: What are the risks of using a travel credit card? 

 As with any type of credit card, there is always the potential for misuse and debt. It is important to be aware of the dangers before you decide to use a travel card. By understanding the risks, you can make an informed decision about whether or not a travel credit card is right for you.

Q: How to choose the right travel credit card?

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