You might hear a lot about how fabulous travel credit cards are. The commercials, the articles, and the points-obsessed bloggers all make it look like the best thing in the world. And, certainly, travel points can help you to take your dream trip a little sooner, or help make a nicer hotel more realistic.
But any credit card comes with a gamble, and it’s all too easy to let your credit card debt get away from you and end up ruining your travel plans for years to come.
How do you know if a travel credit card is right for you? I’ve put together a few questions to help you decide.
If you want to keep track of your budgeting (points or not) for an upcoming trip, be sure to download my travel budgeting and savings schedule worksheet. Just click here to download it now:
Disclaimer: I am not a financial expert and you should always do what you think is best with your money. The following is a set of questions that may help you make a decision, but should not be taken as financial advice, since I obviously don’t know your unique financial situation. I encourage you to pursue whatever system works best for you and your own money.
Can you commit to paying off a credit card every single month?
This is one of the most critical questions on this list. The reason that travel credit cards can afford to have great benefits like miles and points bonuses for signing up is because the interest rates are much higher than other credit cards. You should really only get a travel credit card if you know you’re going to pay it off every month.
Carrying debt on a credit card is never a wise decision, but it is especially unwise when you have a high interest rate. The best way to utilize a travel credit card is to put most of your purchases on it every month, to get as many points as you can, but then to pay it off fully from your checking account. Be sure to make your payments on time as well, to help your credit score.
Do you trust yourself not to get carried away?
This is really another aspect of the first question, but it’s also an important thing to consider. After all, depending on what your credit card limit ends up being, you might be able to just book your dream trip right now, and deal with paying for it later! Do not do this.
After all, you might get a great trip now, but you’ll end up paying more for it in the long run as you pay off your credit card, with interest. It’s tempting in the moment, but once you think about the much better trip you could’ve taken with the very same amount of money spent, you’ll reconsider.
Contain your spending to what you realistically need, and don’t go nuts just because you can.
Where do you already spend the most money?
Look at your bank accounts online, or analyze your Mint budget, and ask yourself where you’re already spending a lot of your money. If you already spend a good percentage of your budget on flights every month, and you’re always flying Delta, than it probably would make sense to get the Delta credit card, because you should be earning miles for all of that spending! The same would be the case if you spend a lot on hotels.
When looking at your expenses, consider both the place you’re spending the money and the kind of expense it is. Even if you don’t always stay at the same hotel chain, if you stay in hotels a lot, you can look into cards that give you bonus points on any hotel stay, instead of a card associated with Marriott or Hyatt.
That said, if you discover that you don’t really spend much on air travel or hotels, a travel rewards credit card might not be right for you.
For more on picking the right travel credit card for you, check out my post about travel rewards programs.
How much of a priority is travel for you?
Travel credit cards are great for people who travel a lot. After all, that’s who they’re designed to benefit. You generally get bonus miles or points when you’re spending money on flights or hotels, or other travel expenses, and the payoff is generally in hotel stays and flights.
So, get real with yourself: how much do you travel? How much do you want to travel? How much of a priority is travel really going to be for you?
There’s no shame in getting a cash-back credit card or a card with benefits other than travel. You should get the card that’s going to have the best payoff for you (that you qualify for). If travel just isn’t that much of a priority for you, that’s okay. I would suggest using NerdWallet to research cards that would be better suited for you.
No matter which way you go in the credit card question, don’t forget that you can download my travel budgeting and savings strategy worksheet right here: