When you’re on vacation, it’s easy to fall into the trap of swiping your credit card for that extra cocktail or fancy dinner. Even those who are usually frugal may find themselves in a more relaxed, carefree mindset while traveling. However, no matter your typical spending habits, keeping your credit card usage in check during a holiday can save you from facing a financial headache once you’re back home.
“Just because we need to use credit cards to book a hotel room doesn’t mean we have to use them for every drink at the beach,” says Jeffrey Schwartz, executive director at Consolidated Credit Counseling Services of Canada. To help avoid that post-vacation financial stress, here are six smart strategies to manage your credit card spending and ensure you can settle your balance when the holiday ends.
1. Budget First, Plan Second
Before diving into sightseeing schedules and dining plans, start by building a travel budget. Chartered accountant and financial literacy author Robin Taub advises travelers to list all potential costs, including transportation, accommodation, meals, entertainment, and shopping.
Once your budget is laid out, ask yourself if each expense aligns with your financial goals. “Is this worth spending on, even while on vacation?” Some credit card companies provide helpful tools for crafting travel budgets, such as BMO’s MoneyLogic or RBC’s myFinanceTracker. These tools can send email alerts if you exceed your spending limits, helping you stay on track.
2. Keep Your Card Company Informed
If you’re traveling abroad, make sure to notify your credit card company in advance. Failure to do so could result in your account being flagged for suspicious activity, which might cause it to be frozen. This can lead to rejected payments and unnecessary late fees.
RBC’s Lena Wan recommends ensuring your contact details are up-to-date so that your card issuer can reach you if there’s an issue. It’s also a good idea to automate bill payments while you’re away. Schwartz recalls a personal experience where he forgot to make a credit card payment during a trip, but because he had notified his card issuer of his travel plans, they waived the interest charges.
3. Maximize Your Rewards
Make the most of credit card rewards programs, especially those designed for travel. Many credit cards offer points or miles that can be used for flights, hotels, car rentals, or even travel gear. Cards like American Express, CIBC Aventura, or RBC Avion Infinite have programs that can cover various vacation-related costs.
If you prefer cash-back cards, any rewards you earn can be applied to your balance when you return. Some programs also allow you to directly apply points toward your travel expenses, providing an easy way to cut costs.
4. Research for Extra Savings
You can find additional savings by researching travel promotions, discounts, and perks offered by your credit card issuer. Most companies offer customer service hotlines or online chat support, where you can ask about deals specifically tied to travel.
The Financial Consumer Agency of Canada offers a Credit Card Selector Tool that compares cards based on their travel benefits, like medical insurance. It’s essential to read the fine print to understand coverage limits and check for any age restrictions or annual fees, which could affect your overall savings.
5. Prioritize Card Security
Having your credit card information stolen while on vacation can lead to both financial and emotional stress. To avoid this, take extra precautions with your credit card, especially in unfamiliar countries.
Gabor Forgacs, an associate professor at Ryerson University’s School of Hospitality and Tourism, advises keeping your card within sight at all times—even if that means following the waiter to the payment terminal. Also, monitor your accounts while traveling and keep all receipts to verify your transactions once you’re home.
6. Set a Lower Credit Limit
If you’re worried about overspending, consider temporarily lowering your credit card limit before your trip. “We always want the highest limit possible, but if you’ve cleared your balance and have budgeted for the trip, it might be smart to lower the limit to prevent overspending,” says Schwartz.
Another option is to use a secured credit card while traveling, which limits your spending to the amount of your security deposit. These cards offer the same perks and rewards as regular travel cards, including discounts, insurance coverage, and other travel benefits, while keeping your spending in check.
By planning ahead and taking these steps, you can enjoy your vacation without the stress of coming home to an overwhelming credit card bill.
