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I’m Going on Vacation — Should I Use My Credit Card for Purchases or Stick to Cash?

Aug. 14, 2014
Credit Card Basics, Credit Cards, Rewards Credit Cards
I’m Going on Vacation — Should I Use My Credit Card for Purchases or Stick to Cash?
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With summer in full swing, you might be looking forward to your big getaway. If you’re going on vacation, though, you may be wondering if you should use your credit card to pay for purchases or stick to cash.

Two factors at play

The question depends on two factors: How responsible are you when it comes to credit, and what does your cash flow look like. If both aren’t much of an issue, then you are probably better off using your credit card to pay for your purchases rather than sticking to cash. Let’s first break down the advantages of using your credit card.

Credit card advantages

  • Reward points bonanza — What better time to rack up reward points on a credit card than on vacation? Some travel rewards cards even give you bonus points for charging air or hotel fare on a branded card.
  • Trip protection — At this point, most credit cards offer lost luggage protection, as well as trip cancellation insurance, as perks for being a member. If you charge your entire airfare on the card, you’ll be eligible for this coverage in almost all cases.
  • Convenience — There’s nothing more inconvenient than going to the pool or to the beach and having to carry cash with you to purchase stuff. The money can get lost, sandy or wet. If you lose the money or it gets stolen, it’s gone. A credit card makes it all easier, and if you lose it or it gets stolen, you aren’t held liable.
  • Wheels and accommodations — Virtually required for most car rental or hotel holds.

» MORE: 7 Ways your credit card could save you money on holiday travel

Cash disadvantage — security

The big downside to using cash is security. If you flash money, you risk becoming a target. If it gets stolen, cash isn’t replaceable or insured. Credit cards can simply be cancelled and you aren’t held liable. You can even get a replacement sent by express mail, if need be.

Credit card disadvantage – paying it off

The major downside of using a credit card for purchases instead of sticking to cash has to do with your ability to pay the darn thing off. Hopefully, if you’ve been anticipating this vacation and the associated larger-than-normal expenditures, you have saved up money for the trip. So, when that credit card statement arrives, you can pay the whole thing off. You’ll be sorry if you don’t pay it all off, and you are now paying interest on your vacation — causing you the very stress you probably just tried to escape. Of course, it’s not a big deal if you charged things on a 0% intro rate, or if your interest rate is low. However, most cards run north of 12% APR, and even as high as 24%. Don’t get caught in that interest-rate trap.

When to stick to cash

If you are concerned about this matter, then give yourself access to the money you saved for vacation. Most vendors still take checks, and most major banks have branches just about anywhere you are going. This way, you can just spend what you’ve saved and not deal with the prospect of paying interest later.

Piggy on beach image via Shutterstock