Should I Put My Vacation on a Credit Card?

Americans are very bad at relaxing. A recent survey from employment site Glassdoor found the average U.S. employee with paid vacation benefits only uses about half of their allotted time off. People gave a slew of reasons for skipping the getaways — not wanting to get behind, fear of being fired, wanting a pay raise or feeling no one else can do the work — but here’s a great reason to take time off: It’s good for you.

There are numerous studies that have shown the health benefits of vacation, so do yourself a favor and take a break from work, if you can. Before you load up the car for a cross-country road trip or buy tickets for a weeklong cruise, you have to think about more than your health. How are you going to pay for your adventures?

Affordability is non-negotiable when it comes to vacation. Yes, there are health benefits to taking time off, but going into debt to do so is counterproductive. The financial crisis provided a unique opportunity to explore the effects of debt on people’s health, and guess what that wealth of research found: It’s bad for you.

Time off doesn’t have to be pricey, nor does a vacation day need to involve a trip. If you can afford an out-of-town escapade, you may want to use a credit card to fund it. Here are things to keep in mind before packing the plastic.

Protect Yourself

Tourists are often targets for pickpockets, and if you’re thinking about worst-case scenarios, you’ll definitely want a credit card in your stolen wallet, rather than cash or a debit card. Credit cards carry stronger consumer protections than debit cards, and cash — well, once it’s gone, it’s gone. However, plastic can also tempt you to overspend, so you may want to be extra-careful about sticking to your budget; tracking spending can help.

On the less extreme side of things, there are other safety reasons for using a credit card for vacation expenses. If you’re booking a trip online (which is sometimes cheaper than using a travel service or making reservations at individual service providers), credit cards are often the safest forms of payment, for the same reason as the previous example: consumer protection. In the event of the increasingly common data breach, stolen credit card information is easier to deal with than compromised debit cards or bank accounts.

If you’re staying at a hotel, you’ll probably have a hold placed on your card for potential incidental expenses. The hold amount can vary widely, and you may not have the financial flexibility in your checking account to have that hold on your debit card.

Finally, some credit cards offer travel protection for trips booked using the card. Read the terms of your card and contact your issuer to find out more about such perks.

Try to Reap Some Rewards

Rewards cards were practically made for travelers — when you’re out and about, you spend money on pretty much everything, from food and shopping to airline tickets and rental cars. Assuming you’ve properly budgeted for the spending increase that comes with vacation (see earlier paragraph about affordability), credit card rewards are a great way to get the most out of your holiday. For example, here are some good cash-back cards.

Got airline miles? See if you can use them to save on airfare. Have a cash-back card? Make sure you use it when spending in the rewards categories, or in the case of universal cash back, use the card for all expenses, from high-priced tickets to occasional meals out. Note: This strategy could have some drawbacks, depending on your credit limit. Using more than 30% of your available credit will hurt your credit score, so don’t get distracted by the appeal of rewards. You could mitigate the risk of hurting your credit score by paying your credit card balance immediately before and after your trip, and you can see more about how credit card use impacts your credit standing by getting two of your credit scores for free through Credit.com.

Financing Isn’t the Best Option — But It’s Out There

While you shouldn’t go into debt for a vacation, you have an option for financing one. You can open a credit card with a promotional 0% financing period so you can spread out your travel expenses without having to pay interest. Otherwise, carrying a balance from vacation is not a good idea.

Beware Fees

If your travels take you out of the country, make sure you’re clear on the terms of your card. Some credit cards carry a foreign transaction fee, which could make using a credit card very expensive. You’ll also want to notify your card issuer of your impending travel, so the out-of-town charges don’t look like fraud.

Another thing about fees (and this doesn’t have to do with credit cards): You may not have access to ATMs managed by your bank when you’re traveling, which can unnecessarily increase the cost of your trip. If you’re going to use cash, strategize before leaving home. Either plan to minimize your trips to non-bank ATMs, research bank ATM locations near your destination or make withdrawals before leaving home.