Should I Sign Up for a Travel Credit Card?

With summer quickly approaching, you might be planning a vacation. Whether it’s a cruise to the Bahamas or an African safari, traveling can be costly. If you have good credit, you may be considering signing up for a premium travel rewards credit card to help you cover the costs. These cards come with huge sign-up bonuses that can go a long way in helping you pay for your summer adventures. However, even if you can qualify for one of these credit cards, the real question is, should you even apply for one?

What You Need to Know About Travel Credit Cards

Many premium travel rewards credit cards boast high sign up bonuses in cash back or airline miles as well as great rewards, which can save you a lot of money on your future travel expenses. However, a lot of these credit cards come with high annual fees that you might not be able to afford. Since these annual fees are taken out on your credit card, they can also increase your credit utilization ratio, which can lower your credit score.

Not only that but these credit cards tend to come with high interest rates, so if you sign up hoping to earn a huge bonus, be careful. A new study found that Millennials are using credit cards more frequently to score big credit card rewards but racking up too much debt in the process. In the end, racking up credit card debt for the sake of earning more rewards may not be worth it, especially if it ruins your credit score.

Pros of Using a Credit Card to Pay for Vacation

If you qualify for a premium travel rewards credit card and use it responsibly, you can save money on your vacation and get lots of perks. Many of these types of credit cards don’t have any foreign transaction fees, so if you travel abroad, you won’t have to pay extra every time you swipe your card.

Another benefit to using a travel credit card to help you pay for your vacation is you can get extra perks and benefits, like trip cancelation insurance, early boarding, free checked bags, or access to airport lounges. These things can make your trip a lot easier and give you peace of mind while traveling.

Cons of Using a Credit Card to Pay for Vacation

While these rewards and perks can be great, using a credit card to pay for your vacation has its downsides too. If you carry a balance every month, you may find it difficult to get out of credit card debt. With a credit card, you may be tempted to overspend.

Signing up for a credit card to earn extra rewards points can also lead to carrying higher balances since you must meet a certain spending threshold in order to qualify for the bonuses. This may lead to you spending hundreds or thousands more dollars than you normally would.

A premium rewards credit card may also offer more miles or cash back for a category that you don’t normally spend much money in. For example, if a card offers extra cash back at department stores, but you don’t shop at these places, then the card may be useless to you.

Another thing to consider when signing up for a new credit card is whether or not you actually need it. Each time you apply for new credit, it causes an inquiry, which lowers your credit score. The new credit card account also shortens your average length of credit history, which can also lower your credit score.  

If you’re struggling with credit card debt that’s bringing your score down, it may be time to consider signing up for credit repair. Give the credit specialists at CreditRepair.com a call today for a free credit evaluation.