Home Finance The Travel Perks and Benefits that a Credit Score Unlocks

The Travel Perks and Benefits that a Credit Score Unlocks

by John Milton
The Travel Perks and Benefits that a Credit Score Unlocks

A credit card is the traveler’s best companion. Whether you carry it for convenience, out of habit, or for security reasons, traveling with your credit card can have many benefits. You can earn reward points and miles from purchases with your credit card, enjoy better exchange rates, or even make more money. Using a credit card as your preferred way of payment during your trip helps you gain flexibility in your transactions.

Nowadays, booking flights, hotels, or shuttles happen online, and sometimes you must do bookings months before travel. As a result, a credit card comes in handy when planning your trip and leaves you with peace of mind, knowing that the quality of activities will not be compromised. A reasonable credit limit gives you financial freedom. Hence, it would be best if you had a good credit score to unlock more travel perks and benefits.

Reward Points

The best way to earn reward points and miles when traveling is by using credit cards. Credit cards such as American Express and Chase Ultimate Rewards allow you to transfer points to airlines and hotels, and hence you can use your points in place of cash when booking your travels. 

Additionally, other cards allow you to redeem reward points for gift cards. However, such cards do not offer the value of booking your trip. When considering credit cards and how to get a credit card with no credit score, it’s essential to focus on travel rewards cards with a sign-up bonus.

To enjoy travel rewards, make sure that you check your credit score, as most cards require an excellent credit score. If your credit score is low, consider improving it first. 

Credit scores are made of five key components: payment history, how you use your credit, the length of the credit history, and recent applications. To maximize your credit card travel rewards, make sure you use the right card, pay off your balance on time, and maximize your rewards by spending them daily.

Better Exchange Rates

Using your credit card to pay for expenses abroad can save you from paying ATM and exchange fees. When paying using a credit card, your purchases will be processed in the vendor’s native currency, saving you money. Generally, most credit cards offer better exchange rates abroad, but it’s essential to beware of foreign transaction fees, usually between 1% and 3.5%.

Spending overseas can be expensive when you factor in interests and the many transaction fees you are likely to incur. However, it’s essential to note that your card attracts foreign transaction charges and a withdrawal fee, often around 2.99%. So, if you are planning to withdraw $100, expect to pay around $6. In addition, using your card for cash withdrawals abroad, you’ll be charged interest if you’ll pay off your balance in full that month, meaning using cards can still be expensive.

To enjoy better exchange rates, ensure that you use specific credit cards designed for overseas use. Overseas credit cards won’t charge you for cash withdrawals, and exchange rates on such cards are usually competitive. Some cards offer extra incentives like travel insurance, but you need a good credit rating to enjoy the best deals.

It Can Be Safer than Cash

Some people prefer holding hard cash when overseas. However, you’d not wander around with your wallet full of money on a holiday as cash can easily be stolen. Carrying around a considerable amount of money can be risky. You might lose some cash every time you convert your money to host currency, so you’d rather be seen with plastic cards than heaps of money.

Credit cards might not be the first thing you think of when it comes to financial and physical safety. But credit cards have robust fraud protection. Credit card fraud might not immediately affect your cash, and cards offer entire online transaction history for your reference. Cash can be dirty as money has components that can hold on to germs.

The Downside of Relying on Credit Cards When Traveling

The biggest hurdle of relying on credit cards for travel is that most small international merchants only accept cash payments. Street vendors, taxis, and concession stands might find your Visa card or MasterCard useless for their business. 

Another drawback of traveling with your credit card is that some credit card transactions require ID verification, meaning you have to carry your passport everywhere, which is not a good idea. If you are lucky to find small businesses that accept credit cards, you’ll notice that they only accept EMV chip cards issued by local banks. So, your magstripe might not help you in this case.

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