How to use your credit cards smartly on holiday

By | May 28, 2011

Credit cards are part of our daily life, with their good and bad. You can hardly imagine a holiday without a credit card. You usually need it to book your flight and to guarantee your hotel reservation. The credit card is used to pay at restaurants and attractions and it also holds some backup money, should anything unforeseeableĀ happen during your trip.

Credit cards can also be a temptation to spend in an uncontrolled manner during your holiday, so you will have to spend the next few months paying it back. It depends entirely on you to keep control of what you spend. Our guide here will show you how to benefit from credit cards and how to use them wisely. We recommend that you pass all this information through your mental filter and see how it applies to your credit cards, because each and every credit card has its own specifics, including interest and fees. When we use the “credit card” terminology in this article, we also refer to debit cards or prepaid cards, since all these allow you to conduct electronic payments.

1. Credit card types
First of all, it is recommended that you have some sort of electronic means of payment while on holiday. Paper money can get lost or stolen, but credit cards and travel cheques can be exchanged or requested again if anything happens to them. Additionally, unforeseeable events can happen during a holiday, so it is not bad to have some backup money with you. When travelling to a foreign country, check what types of cards are usually accepted. In some countries like Austria or Germany, some smaller shops accept only debit cards or local cards, so your Visa, MasterCard, AmEx or Discover can be useless. In almost all countries, small shops usually accept no cards at all. Prepare your cash in these situations, either taking it from home or withdrawing it from an ATM.

2. Fees
Check before your holiday what fees does your credit card company charge. You may find for example that there is no fee to pay in stores, but there are fees to withdraw from ATMs. Or you may find out that there are no fees to withdraw cash from the ATMs of some partner banks, but there are high fees to withdraw cash from other banks. You can save some money by knowing exactly what fees you have to pay and in which situations.

3. Fraud risks
There are countries where the fraud risks are higher, so banks tend to be cautious when seeing that you pay with your credit card in such countries. It can happen that your bank blocks your credit card after the first payment in a risky country. This is of course something you want to avoid, so check with your bank before leaving if the country where you are travelling is on their black list and if so, ask them to white list it for you for the holiday time. When you travel in such countries, keep your eyes on your credit cards when paying. Don’t allow anyone to take your card away for a few minutes in order to process the payment, they may actually copy your card.

4. Travel insurance, loyalty programs and other benefits
Some credit cards automatically offer travel insurance for you. Check if this is true and you can save money on your health spending while abroad. Credit cards may additionally include free access in some airport lounges or discounts at various shops. Knowing all these in advance and using the right credit card in the right shop can help you to reduce the price of your shopping or to gather bonus points.