Travel credit cards are a good way to spend your cash.
However, there are a few things to keep in mind.
Key points:AAP’s travel credit card study shows that many travel creditcards can be useful, but you need to weigh up the benefits versus the risksThe study also found that most travel credit is a great way to save cash, but it’s not a panaceaAll travel credit issuers have to comply with strict anti-money laundering rules and have the most stringent security policies, but some have been caught red-handed.
For instance, one of the best ways to protect yourself is to have a reliable cash-to-travel payment method, but many credit cards don’t have one.
“There’s an inherent risk with a credit card, but if you have a cash-on-entry payment method like a cashier’s check, it’s actually more likely to result in a fraud,” said David Macdonald, chief financial officer at financial technology firm Airtel.
“The reason that credit cards get a bad rap is because they’re generally not a great investment.”
What’s the risk?
A travel credit can have many benefits, but the benefits outweigh the risks.
If you’ve been using a credit cards for years, there’s little reason to change your strategy.
A good travel credit will cover everything from the basics to luxury flights.
“A credit card can help with your everyday expenses, such as a hotel stay or car rental, but in terms of the things you really want to cover, there is no need to use a credit credit card,” said Macdonald.
“You can spend the money on whatever you want to buy or even on anything that you want that you’re not planning on using that much.”
In addition to the basics, a travel credit gives you a better chance of getting a good deal when shopping.
“If you have cash in your wallet, and you’re planning to spend it, you can put that cash towards a travel card,” he said.
“I would say it’s pretty simple.
It’s just put money in the travel card and when you use it, it adds to your credit score.”
The risk is that a travel travel credit won’t always be as cheap as you think it will be.
“Some travel credit programs have lower limits than the cards themselves, which means that if you spend more than the card allows, you may have to pay interest charges on top of the cost of the card,” Macdonald said.
“Also, if you get caught up in debt, you’ll be stuck paying interest.”AAP/ABC