If you’re anything like me and any mention of the words “Credit Card” sets off (imaginary) alarm bells in your ears, I’m here to tell you why you need a credit card for your travels.
I know, I know, another piece of plastic to wedge between the various loyalty and store cards for places you rarely shop, but a credit card provides you with protection and opportunities not usually available with a traditional debit card.
This post is more focused for UK readers and I talk about UK banks, but in general, no matter where you live, if you love travelling this could be useful to look into.
I feel like here in the UK we’re much more wary of credit than our friends in the US. We’ve all heard stories of perfectly nice people being destroyed by crippling credit card debt; it’s a scary reality we cautiously steer away from. Both Mr H and I live by the “can’t afford it, don’t buy it” rule, meaning we’ve never really felt the need for a credit card…that was until we started running into problems using our debit cards on our travels.
That time a hotel tried to cancel our booking…
A few weeks prior to our South East Asia trip in ’16, our hotel in Malaysia reached out to let me know there was an “issue” with my payment. I had paid through the (well known) chain’s website, with my Debit Card. After going back and forth numerous times trying to figure out what the problem was; they informed me they could not process debit cards and that they required a credit card to secure the booking or my booking would be cancelled or charged at a higher rate.
After £70+ spent on calls to useless staff at the hotel trying to remedy the problem (them even telling me to borrow someone else’s credit card to make the payment!) we decided to make a (very costly) bank transfer to secure our accommodation. The hotel confirmed receiving the funds less than 48 hours before we got on our 13.5 hour flight – all in all, a very stressful experience made worse by us not having a credit card!
This is a common problem….
This problem isn’t exclusive to South East Asia alone, we’ve noticed this in other regions too; some hotels demanding a full cash payment at check-in in place of a credit card, while others demand credit cards to secure bookings.
This doesn’t just affect accommodation; last year when we were planning our road trip through Croatia, we weren’t able to find a single car hire company that would allow us to hire a car with a debit card. Coming from the UK, where hiring a car with a debit card is commonplace – this was certainly unexpected.
So, a few days before we set off for our road trip, with little time to spare and no other options for car hire, we signed up for our first credit card (we’re officially adults now!) and we haven’t looked back since!
Aside from having the peace of mind of being able to pay for your accommodation or car hire, there are many other benefits to having a credit card for people who love travelling.
Here are some benefits of the ways a credit card can help you:
Free travel and upgrades to the most luxurious airline cabins!
Aside from more peace of mind in travel bookings, this was one of the most rewarding things about signing up for a credit card and the reason I wish I moved all my spending onto credit cards 10 years ago (still mourning all the miles I could have earned!)
If you’ve ever seen videos of bloggers or avid travellers flying around the world in the most luxurious airline cabins and wondered how on earth they are able to afford such luxury; the answer is usually down to credit cards and effective air mile “hacking”.
Credit card companies offer a whole host of perks to attract customers, many of them offering airmile bonuses for signing up. Travel-specific credit cards allow you to collect air-miles for money spent on the card – which is one of the fastest ways to boost your airmile balance and secure yourself free flights or seats in luxury cabins.
Extra cover and protection
All credit cards are different and offer different types of cover but one thing all credit cards in the UK offer is additional protection in the case of lost, damaged or faulty items.
Thanks to Section 75 of the Credit Act, credit card companies bear the same responsibility as the retailer on all purchases made on the card costing between £100-£30000. This means that if you were to purchase an item which turned out to be faulty – which cannot be fixed, or if the company you purchase from goes bust before you receive your item, or your item never turns up – your credit card company is liable to refund you the amount paid.
If you’re paying an annual fee for your credit card, you may also have access to extended cover by the name of “Purchase Protection” – this cover protects you in the case of theft or loss of items purchased with the card. The credit card company will refund you for the value of the lost or stolen items within a set period of time.
Here’s a useful guide to help you understand CC protection.
Widely accepted all over the world and back up funds
Credit cards are widely accepted all over the world, meaning you’ll always have a back up if you run out of physical money, if you end up spending more than you have budgeted or you have unexpected costs.
A few years ago my return flight from Germany was cancelled and British Airways told me to find (and pay for) my own hotel and fill in a reimbursement form upon my return to the UK – had I not had the funds to pay for a hotel on the spot, a credit card would have meant the difference between me sleeping in an airport for the next 24 hours or a comfy hotel room until I was rebooked onto another flight!
Always be careful with cash withdrawals from Credit Cards – this often comes with a hefty fee.
Some Credit Cards come with 0% foreign transaction fees which can save you a LOT of money in the long run if you’re booking hotels in other currencies and paying for services on your card.
Building your credit history
Whilst there are plenty of other ways to build up your credit history, having a credit card and making regular payments on time is a great way to boost your credit history. Showing businesses that you’re able to stay on top of payments and borrow responsibly opens the doors to not just higher borrowing limits, but financing options too.
If your laptop suddenly goes bust or you need to replace a camera quickly and you aren’t in a financial position to do so, a solid credit history can make you eligible for financing plans and help you get back on your feet quickly.
All the free perks!
Credit Card companies are extremely competitive and will offer a wide range of perks to encourage you to sign up. Take your time to choose the Credit Card that’s right for you and your needs.
If you’re an avid traveller, getting a travel-focused credit card is a no-brainer. If you’re a BA fan, the British Airways American Express will reward you with 5000 bonus Avios for signing up, 1 Avios per £1 spent on the card, and a 2-1 companion voucher for flights after you’ve hit a £20,000 spend on the card.
The Lloyds Avios Rewards card is another popular travel-focused credit card; you’ll get two cards, an American Express and a Mastercard (very useful where one is accepted and the other isn’t), Lloyds will reward you up to 1.25 Avios per £1 spent on the cards (with a double Avios boost on purchases for the first 6 months on the Amex card), you’ll get a flight upgrade voucher after spending £7000 in a year (hello first class!) and best of all, no foreign transaction fees!
This is such a rarity for a UK credit card, and well worth having for your travels! There is a host of other perks to this card which you can read about here.
If you get a travel-specific credit card you’ll also be able to take advantage of regular cashback offers on airlines, hotels and car hire, as well as bonus miles promotions – saving you £££!
If you’re not in to travel, a supermarket credit card which rewards you with Club Card or Nectar points can save you a lot of money on spending in the long run. Money Saving Expert has a great guide highlighting perks and benefits of various UK credit cards.
Convinced? Great! Final thoughts…
The perks sound great and having purchase protection is so useful – but the reality is, if you’re not careful, spending on a credit card can become a slippery slope that is difficult to recover from.
Be responsible. Pay your credit card off, in full, each month. Set up a direct debit from your main account to clear the balance every month just in case you miss the payment date. Download banking apps to keep track of your balance while you’re on the go and give you peace of mind.
If you pay your balance off in full every month, you will not pay any interest.
Don’t borrow more than you can afford to pay back. Follow this simple rule, stay on top of your payments, and you’ll start reaping the rewards of credit card spending.
Stay tuned for part two where I talk about Charge Cards ( a great alternative to credit cards for those of you still wary of credit cards!)