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How a Travel Credit Card Can Help You Save on Your International Holidays

Adhil Shetty
Image source: Freepik

The opportunity to explore a new country (or re-explore a one you’ve already visited) doesn’t come every month in our stressful professional lives – well, for most of us at least. Hence, it’s obvious that we make detailed plans to make the most of our holidays without breaching our budget. However, international holidays are often pricey, and it’s best if you set raising your travel fund as a financial goal at the beginning of the year and channelize your savings and investment returns accordingly to ensure you meet the goal within the predefined timeframe without accumulating debt.

Booking cost-effective accommodation, going for public transportation instead of hiring cabs for longer commutes, avoiding lavish meals, keeping shopping costs under control, etc. are tried-and-tested strategies to save money while you’re on a vacation. However, there’s another way to boost your savings – by using the right travel credit card. Read on as we tell you how.

Travel credit cards offer a host of travel-related benefits, perks and privileges. They can broadly be categorized in two segments: co-branded cards (that offer multiple benefits linked to a particular airline provider or travel portal) or general travel cards (that offer a number of travel benefits not limited to any particular travel brand). Let’s see how you can make the most of your travel credit card to save more during your trips:

Redeem air miles for free or discounted air tickets among other perks

Majority of travel credit cards let you earn travel reward points called air miles when you charge expenses to your card. And these air miles can then be redeemed for free or discounted flight tickets among other things like travel merchandise, free seat upgrades and hotel bookings depending on the number of air miles you’ve accumulated, the air mile provider’s policy and the cost of the flight tickets.

However, keep in mind:

  • Miles conversion rate: How much do you need to spend to earn the miles?
  • Miles earning rate: Which transactions let you earn more miles?
  • Miles redemption rate: How many air miles are required to redeem for flight tickets?
  • Travel partners: Number of travel partners (like airlines, hotel chains, travel portals, etc.) whose services can be redeemed with the air miles
  • Miles validity: How long will your accumulated air miles stay valid for redemption?

It’s best if you get complete clarity on all these things before signing up for a credit card. It also makes a lot of sense if you go for a card which earns more air miles for particular transactions (like shopping on certain portals) that are in line with your regular spending habits.

At times, travel credit cards do charge an annual fee but offer bonus air miles in return, which is great. However, evaluate the affordability of the annual fee and consider the income requirement among other eligibility criteria (like a good credit score). And in case you’re going for a co-branded travel credit card, it’s important you ensure that you frequently use the services of that particular airline when you travel.

Complimentary travel insurance protection

From flights cancellations and lost luggage to an emergency medical condition overseas that requires hospitalization, there are a number of things that can go wrong on a trip. That’s why a travel insurance plan is a great way to protect your financial interests against trip-related emergencies. What’s even better is that a number of travel credit cards offer complimentary travel insurance plans, at times when you make your flight and hotel bookings using the card. These are mostly no-frills plans with basic protection for flight cancellations and delays, overseas hospitalization (in some cards), among other perks with no additional riders on travel destination or pre-medical conditions. Plus, they come for free!

However, if you’re looking for customized and comprehensive travel protection you may see merit in going for a standalone travel insurance plan. Also, the credit card-linked plans often cover the principal cardholder only, and you might have to go for other group plans if you’re travelling with family.

Free access to airport lounges

International trips often involve long layovers, and getting rejuvenated at an airport lounge is a great way to spend the time. And it’s best if you get to enjoy this for free, thanks to your travel credit card. But keep in mind that usually there are some riders attached to this facility – from a limited number of lounge accesses in a year to entry at only certain airport lounges and additional charges for the “plus ones”.

Lower foreign currency mark-up fees

There are some travel credit cards that charge a much lesser foreign currency mark-up fees (as low as 2%+GST) for your transactions outside your country of residence or at overseas portals. This also helps you save some money when you use your card internationally.

Other special offers and privileges

Many travel credit cards also offer temporary deals like special discounts on hotel bookings made through certain portals or at particular properties, deals at participating restaurants and shopping outlets, complimentary concierge services and other travel assistance, and even deals on airport taxi rides! These benefits can also make a difference in your overall travel experience.

As such, whether you’re a frequent traveller or someone who loves going on a vacation at least once a year, it makes a lot of sense to use a travel credit card and accumulate bags full of reward points that can be redeemed for a host of travel benefits. However, it’s helpful when you compare all the card options before settling for the one that best suits your requirements and budget. Also, it’s critical that you closely scrutinize the terms and conditions attached to any credit card before signing up for one, and evaluate typical riders like annual fees and spending requirements to avail the desired benefits. Overspending just to earn more reward points can lead to piling of debt, and missed repayments will attract interest charges and late penalties apart from impacting your credit score.

The writer is CEO, Bankbazaar.com