According to a recent study by Talker Research on behalf of CheapCaribbean Vacations, rising costs are changing travel habits this year, with 58% of respondents saying they plan to spend less on travel this year than last. The survey also pointed out that 72% of Americans were willing to be more flexible with their travel schedules to save money. If you’re planning to travel this summer, you want to ensure you do whatever you can to cut back on expenses.
We consulted travel experts to learn which vacation expenses shouldn’t be charged to a credit card and why they may cause financial headaches for credit card users.
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Large Refundable Deposits
“Large refundable deposits that freeze a significant portion of the available balance can be very limiting if you didn’t account for them initially,” said Steven Vigor, a travel expert and CEO at Revigorate, a Europe-focused travel concierge. “Authorization holds, especially coming from hotels, car rental companies, and cruise operators, can remain pending for weeks. If your balance carries over unpaid, it can potentially result in accumulating interest afterward.”
Vigor emphasized that the rewards and travel protection may be enticing, but you may not want to get into the habit of putting large deposits on your card. Even though you get the money back, you may have to wait until the end of your trip, and you could end up paying interest fees.
How To Handle This Expense
Vigor urges everyone to read the fine print of every sizable booking they’re committing to. From there, you want to simply ask questions about the deposits you’re expected to make. This alone will save you many headaches, because you don’t want to find out you’re responsible for a $5,000 hold. You may already be putting a significant portion of this trip on your credit card. Then, when you have to put another major expense on your card, you can easily go over your limit or even have your card declined.
This leads us to the next point.
Large Nonrefundable Expenses
“Travelers should never put large, nonrefundable trip costs, especially luxury vacations, cruises, guided tours, or expensive international trips, on their credit card without extra protection,” said Chrissy Valdez, a licensed travel insurance expert and senior director of operations at Squaremouth. She warned that it’s common for travelers to assume credit cards provide comprehensive protection, but many protections are far more limited than those offered by standalone insurance policies.
While the idea of putting your group trip on your credit card may seem appealing because of the potential rewards, you may end up with headaches if anything doesn’t go as planned or if you have to make any changes to flights or travel plans.
Valdez shared the following warnings about large travel expenses:
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No major credit card currently offers Cancel For Any Reason (CFAR) coverage.
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Travelers can lose more than $500 in airline redeposit fees for canceled award flights, which most cards don’t reimburse.
How To Handle This Expense
If you’re putting an expensive trip or an entire group activity on your credit card, you want to ensure that you’re spending the extra money on proper coverage.
Valdez added, “For expensive trips, travelers should view credit card coverage as supplemental, not their primary safety net, and purchase travel insurance instead. A standalone policy provides a much broader financial security net for cancellations, disruptions, and emergencies.”
You may also want to ask for payment up front so you’re not stuck trying to collect after you’ve been hit with cancellation or modification fees.
Other Expenses To Avoid Putting on Your Credit Card
The following are two common vacation expenses you may not want to put on your credit card.
Random Vendor Payments
“Never pay with a credit card to a vendor that you can’t verify through reliable social proof and digital records,” said Vigor. While you may want to purchase something at a local market, you want to ensure that the credit card processor is legit and verified.
Unverified Booking Platforms
Vigor stressed that people are easily fooled by Facebook or Instagram ads, and it’s not uncommon to see them get scammed. He pointed out that many people assume that credit card payments are protected, but chargebacks involving international vendors can turn into lengthy, paperwork-heavy disputes. You want to confirm that you’re booking with an official platform before you send any travel payments over.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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