Is a Travel Credit Card right for you?

Wouldn’t it be nice to travel full-time? Unfortunately, financial limitations are constantly getting in the way. What about travel credit cards? Isn’t it possible to leverage your way into the freedom you desire? As a budgeting expert (self proclaimed) I would say there’s a few things to consider before jumping head first into a borrowing binge. Hopefully these few guidelines will help you decide if a travel credit card is right for you.

Are you in Debt?

Credit cards can be a very dangerous utility. With high interest rates working against you, its better to have all your loans and other debt cleared away before any luxury expenses. It’ll be even more difficult to dig yourself out of the financial hole. Its beneficial to have extra income going straight into your desired travel plan for a stress free vacation. My suggestion; pay off all your other debts and minimize your expenses before signing up for a travel credit card.

Do you have terrible spending habits?

Do you already have multiple maxed out credit cards? Do you seem to spend money faster than you earn it? Then another credit card is probably not right for you. Especially on trips, its easy to get carried away with unconscious spending. Maybe the phrase “Treat yourself” has taken hold of you and won’t loosen its grip. Either way until you can become self-aware of consumer habits and optimize spending, it is not a good idea to sign up for more credit card debt.

Is traveling a priority?

Aside from all the negative aspects of a travel credit card, there are a few benefits. Many credits cards offer an initial sign up bonus in the form of points or miles to be used toward future travel purchases. The trap is that you have to spend a certain amount (usually a couple of thousand) within the first few months of opening it to receive the bonus. If planned accordingly with your future travel itinerary, you can use the leverage to your advantage. Planning ahead and purchasing all your plane tickets, hotels, or car rentals in advance can help you reach the bonus limit with purchases you intended to make anyway. That way you will get a free trip just by executing all your purchases at the same time. And all future purchases should add points or miles on a one-to-one or higher dollar amount. So hopefully every dollar spent should be one that adds toward another free trip. *Its important to read each  contract carefully and know what expenditures you get points for and at what rate.

Is a Travel Credit Card worth it?

This answer depends on your own unique situation. For people already drowning in debt or with terrible spending habits, I would reconsider another strategy to optimize your traveling. If you can carefully plan each trip and stay conscious of expenditures, then it may be worth considering. But the points/miles system is far from perfect. Usually bonus limits are very high to reach the initial offer, and points don’t seem to add up to a whole lot. Spending thousands just to get a couple hundred dollar ticket may not be the best strategy, but if you are a frequent traveler and plan your trips far in advance it may be a nice addition. I’ll do do a future post on which travel credit cards are the best available for all you seasoned travelers out there so stay tuned! as always thanks for reading and keep leveling up!