There's no doubt about it: Australians love to travel. In fact, the Australian Bureau of Statistics saw 18.7 million departures from Australia in their latest data, 9.9 million of which were Aussies leaving for short-term trips. No matter where the final destination, all Australians gear up for adventures abroad the same way. By saving tonnes of money!
Being money-conscious before and during a trip is a smart way to ensure you're not going to blow your savings while away. There's quite a bit to consider when it comes to planning and paying for a holiday, and that's why many lean on their credit card to help them pay for their travels. But is that a sound financial idea? Today, we find out.
Financial planning for a holiday abroad.
The first step in planning for a trip overseas is to assess where you're going to be spending your money. Here are some of the basic holiday costs you'll need to account for:
- Airfare
- Relevant visas/passport charges
- Car/transport services
- Accommodation
- Food
- Entertainment/sightseeing tours
- Travel insurance
- Emergency money
This is often where people start thinking in terms of credit. Your credit card is a good tool to help you purchase and secure a lot of these costs, right? Well, not always.
The chances of you being able to pay off all the expensive items within a reasonable time are relatively low, and you don't want to put yourself into debt just for a couple weeks of bliss. Allow us to break down this list for you, highlighting the areas where it's a good idea to use a credit card versus ones where it's not.
Do use a credit card when you're paying for…
The big ticket items. Your airfare, car hire, accommodation and travel insurance are all great places to pay via a card. Of course, it's important to lock these items in a couple months in advance to ensure your trip is all squared away, but the earlier you pay for them with a credit card, the more time you'll have to pay them off before the other holiday expenses come into play.
Additionally, should you have to cancel your trip, it will be easier to get your money back as the travel insurance documentation will require you to submit your receipts. And, if you have your card set up to reward you for travelling, you'll want to rack those points up for future trips!
Avoid using a credit card when you're paying for...
Holiday activities and gifts. You'll want to be careful when you're booking for certain tours or activities as you can't always get your money back if something goes wrong. If you're booking a scenic boat ride in Italy or an exciting safari in Africa, you want to make sure you read the fine print. Sometimes, you're better off waiting to book until after you get there.
Other things like public transport services, food and emergency money are all worth paying cash for. In order to avoid foreign ATM fees, head to your local branch before you leave and order some foreign currency from there. That way, you also know how much you have to spend so you can stay on track with your budget.
Before you go…
Don't forget to call your credit card provider to let them know you're going on a trip abroad. If you don't, they might shut your card off for 'suspicious activity' and that would be no way to start your holiday.
Additionally, if you're nervous about not having enough money and getting stranded while you're abroad, you can set up a credit limit on your savings account. It extends your available balance that's linked to your Visa Debit card to help you with any speed bumps along the road, and you only pay for what you use.
Do you have any more questions about using your credit card while you're abroad? Reach out to the team at Beyond Bank for more information before you head out on your big trip!
