A common misconception when it comes to budgeting and finances in the context of traveling is that you should always use cash as much as you can. People often think that it’s the best way to pay for their expenses and that there’s no other payment method that can top the use of cold hard cash. However, we would argue the complete opposite.
In this article, we will show you some of the best reasons why you should be using credit cards for expense payments, especially when traveling. On that note, if we have convinced you to change your perspective of paying using credit cards, check out our recommendations for the best travel credit card companies on the market right now so that you can take this guide and apply it to your real-world experiences.
Credit card perks for travel and rentals
Some banks and financial institutions offer credit cards that are accompanied by travel perks, such as insurance. If you consider yourself a frequent traveler or if you just cannot afford to face hassles on your flights, it might be a good idea to apply for a credit card with such perks attached. This can be very helpful in cases of flight cancellations, delays, interruptions, baggage issues, or even medical issues. This is arguably a better alternative as opposed to applying for separate and discrete private insurance coverage. On top of all this, some companies will also extend their insurance policies to car rentals. This is an added peace of mind factor when traveling, especially if you usually rent cars to get around town.
Better exchange rates
This next item is more concerned with international travel. As we all know, foreign currency conversion will cost you some value on the money that you want to be exchanged. This is primarily how the foreign currency exchange industry earns money. Unfortunately for us, this means that the effective value that we can get out of our hard-earned cash is going to be a lot lower. Credit cards solve this problem because they often have lower conversion fees.
Typically, this ranges from around 2.5% to 3%. This is still considerably lower as compared to having your cash exchanged at currency exchange facilities, where you can expect to pay upwards of 5% per transaction. If you’re very lucky, your company may even offer you promotions or policies which completely remove conversion fees. Through this, you can save a ton of money when traveling abroad.
Credit card companies often have rewards programs for their customers. Some companies offer up to 2% of the value of the customer’s purchases in either points or cash. These points can be redeemed and exchanged for gift cards, travel ads discounts, and even rebates on bank transactions. Another great thing about using credit cards is that you can benefit from insurance and warranties. This means that not only are you protecting your purchase from theft and accidental damages, but you will also have a longer warranty period for service, repairs, and returns. This is on top of the fact that you can expect to receive up to 2% of the product’s value in return. At first glance, these savings might be minuscule, but they can quickly add up over time, especially if you are a frequent buyer.
Convenience and security
Using credit cards for payments would mean that you are not going to bring lots of cash with you when you go out. Primarily, provides a high degree of convenience in that you won’t have to deal with change, wallet space, or even worrying about fakes. Additionally, it also serves as a safety factor in that you are less susceptible to crime. Bringing lots of cash with you around will make you a target of theft and other criminal activities.
Finally, credit cards cannot be easily stolen and used. Once you lose cash, you can generally expect to lose it permanently. Cash can be easily liquidated or used to purchase other items. Cash is also very difficult to track. On the other hand, credit cards are encrypted, cannot be conveniently used by non-owners, and are easily tracked. You can even contact your bank immediately if you lose your credit card so that you can lock your account and protect yourself from losing money in the process.
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