CardHub.com recently released its list of the Best Travel Credit Cards for 2013 , selected from more than 1,000 different offers, in order to help consumers save as summer vacation planning gets into full swing amidst expectations of increased spending despite the still-recovering economy.
The right credit card can save consumers hundreds of dollars on summer travel, due in large part to the rising value of initial rewards bonuses and 0% financing offers, but leveraging their full value for a summer trip necessitates getting the process started soon. Listed below you will find Card Hub’s choices for the best travel cards in three different categories – initial rewards bonuses, ongoing rewards, and 0% rates – along with commentary from Card Hub CEO Odysseas Papadimitriou and some additional money-saving summer travel tips, including those specifically targeted at vacationers headed abroad.
Consumers who are either currently burdened by credit card debt or who plan on paying off a vacation over time will likely find a low interest rate to be their best ally in freeing up money for summer. After all, finance charges on a rewards card can quickly exceed the redemption value of points, miles, and cash back.
• Use Your Credit Card for Currency Conversion: Visa and MasterCard offer exchange rates that are 8.1% lower than those offered by the average major bank and 16.2% lower than what Travelex charges, according to CardHub’s Currency Exchange Study.
• Avoid Foreign Transaction Fees: Around 90% of credit cards charge a premium to process transactions outside of the United States. You don’t have to be physically abroad to incur such a surcharge – which is known as a foreign transaction fee and can range from 2-4%, depending on the card. Rather, they apply whenever you make a purchase through a foreign-based merchant. As long as you have a no foreign transaction fee credit card, you won’t have to worry about these pesky fees.
• Take a Low-Fee Debit Card: You won’t be able to use a credit card for everything when abroad, so the best approach is to take a Visa or MasterCard debit card that has low fees for international ATM withdrawals so you can take out cash as needed and benefit from low card network exchange rates.
• Don’t Bother with Chip-Based Cards: The international community is moving increasingly toward a chip-based credit card infrastructure complete with automated machines at places like train kiosks and parking garages that may not accept U.S. magnetic stripe cards. You might take that as a reason to get one of the chip-based cards now being marketed to U.S. consumers, but most of them are chip-and-signature cards while automated machines only accept chip-and-PIN (you can read more about the difference here). There are a few chip-and-PIN cards available to U.S. consumers, but they’re mostly from a handful of credit unions and don’t offer the most competitive terms. Most international merchants still accept magnetic stripe cards anyway.
• Pay in the Native Currency: This doesn’t apply to domestic travelers, but those of you traveling abroad should make sure to only sign receipts expressed in the local currency. Foreign merchants sometimes offer to convert prices into U.S. dollars in order to charge a high conversion rate and line their pockets.
• Think Plastic: Credit cards obviously provide a lot of value through initial rewards bonuses and 0% financing deals, but they also offer $0 fraud liability guarantees, the lowest possible currency conversion rates, and complementary rental car insurance coverage. It’s therefore a good idea to use plastic for the majority of your travel expenses.
• Think Outside the Box: The most obvious vacation destinations and types of accommodations are naturally going to be the most popular and therefore the hardest to book on a budget. As a result, you may want to consider taking a mid-week flight, going to a small town, renting a house rather than booking rooms in an expensive hotel (especially if you’re traveling with a big group), and leveraging free resources like public transportation and destinations known for natural beauty.
• Mix Business with Pleasure: If you can find a way to squeeze in a few meetings around your trip, certain aspects of it may be tax deductible. While your travel must technically be “for business” and only your own business-related expenses are deductible, you’re allowed to tack a few recreational days onto either end of a business trip and you can certainly brainstorm ways to include your family under the business umbrella even if they aren’t employees (e.g. piling everyone into a rental car that would ordinarily be just for you).
• Comparison Shop: Comparing the prices of different air carriers, hotel chains, and vacation packages will enable you to identify best possible deals. You might even be able to score a more attractive price than what’s listed online by telling the sales representative that you’ll book immediately if they can beat a specific competitor’s offer.
• Maximize Your Credit Score: All of the Best Travel Credit Cards for 2013 require above-average credit for approval and therefore clearly illustrate the value of the best possible credit score. So, if your credit standing needs some work, make sure to have an open credit card that’s in good standing (look into opening a secured credit card if not), pay your monthly bill on time without fail, and you’ll see positive information flow into your credit reports on a monthly basis. This will either devalue negative information already in there or fill out a currently thin file.
• Tell Card Issuers You’re Leaving: Credit and debit card companies may suspend your account if a bunch of transactions suddenly originate from outside your normal spending area. You can prevent the resulting hassle by simply telling your issuer where and when you’ll be traveling. This is especially important if you’re headed out of the country, but it could come into play for long domestic trips as well.
“The fact that U.S. consumers added nearly $36.2 billion in new credit card debt during 2012 tells you everything you need to know about our ability to budget and avoid costly finance charges. If you are currently in the red or anticipate the need for some extra time to pay down upcoming travel costs, the best thing you can do is consult a credit card calculator to devise a debt payoff plan and open a 0% credit card to keep your balance from growing while you get rid of it. Just make sure not to use your ability to get a 0% rate as an excuse to spend more than you normally would or pay off your balance at a slower pace.”