How to make your dream vacation real with credit card rewards

On the front, a vacation is all about visiting a new exotic location and collecting memories that you can cherish forever. But there is another side to holidays- the finances. From transport and lodging to dining and sightseeing, every component of your itinerary requires you to shell out a few thousand. Fortunately, there are some credit cards which make these expenses less of a burden for you in the form of rewards, cash back or sometimes even upfront discounts on flights and hotel stays. But how do you use them to get the most out of your travel budget?

Let’s take the example of Abhay. A hardworking techie from Bangalore, he always wanted to take a trip to Spain but his finances never allowed him to fulfil his dream. His friends talked about how they got discounted rates on flights using their credit card but Abhay was unconvinced. It was only after he got a travel credit card that he could make his dream vacation real with the help of sign-up bonus reward points. His travel expenses were significantly reduced with the help of a credit card.

To turn your dream vacation into a reality, the first thing that you need to do is to find the top travel credit cards that you are eligible for. Banks, nowadays, offer several credit cards with numerous travel privileges.

The Art of Travelling on a Credit Card

This is the art you need to master if you want to make considerable savings on your next vacation. The first and the most obvious step is to find the right credit card- one that is loaded with travel benefits. Now, travel benefits may come in various forms-

* Some credit cards offer air miles on every transaction you make. Number of air miles earned may be more or less based on the type of transaction.

* Some banks offer the facility of converting normal reward points into air miles.

* You may also get discounted deals on flight fares when you book through a particular website.

You should strategize your expenses in a manner that lets you earn maximum rewards. Get a credit card which offers significant sign-up bonus rewards. For example, one of the SBI Credit Card offers 20,000 bonus reward points on payment of joining fee which can be redeemed for travel vouchers. So, it is important to get welcome benefits, especially if your credit card comes with a hefty annual fee. Sometimes, you are required to reach a certain spending limit within a defined period in order to avail the welcome bonus. 

Rewards/Air Miles are the way you will earn from your credit card. So, try to earn as much as possible by putting your bills on that credit card. Find out what type of transactions give back the most and put those bills on that card.

Strategize Your Vacation and Maximize Your Rewards

If you want to travel for free or for a significantly lesser price, you need to maximize the rewards on your credit card. For this, you first require clear goals. Here, you begin by deciding where you want to go for the next trip and how much time you have so that you can plan accordingly. Once you have decided a location, research about the lodging and transportation cost along with how much you plan on spending. Set a clear travel budget.

Check the current reward points/air miles that you have accumulated so far and how much more to go for a beneficial redemption. Check your bank’s rewards catalogue to know about the terms and conditions of rewards redemption. Work towards earning more rewards by putting your grocery bills, utility bills and other expenses on that credit card. It is smart to put recurring expenses like these on your travel card for earning maximum rewards.

In case you are planning to apply for a new credit card, look for one that comes with great sign-up bonus rewards. Most of the travel credit cards offer the welcome bonus in the form of air miles or travel vouchers that can be redeemed with a particular brand. Both will be beneficial for someone who is planning a holiday.

Redeem at the Right Time

Timing is an extremely important factor when redeeming the rewards on your travel credit card. Both air miles and reward points have a certain lifetime after which they expire, so you must redeem them while they are still active. The date of expiry will be mentioned in your credit card online account.

Moreover, flight fares and hotel tariff may shoot up during peak times so you will need extra miles to cover the increased cost. If you want to save the most, it is better to travel during the off-peak season. Also, do not pay for every travel expenditure with a credit card. Sometimes, it makes more sense to pay cash.

Be a Smart Credit Card User

While it is wonderful to pay for your travel expenses in reward points, this move is good only when you are a responsible user. It is not advisable to put your bills on a credit card that already has several EMIs pending on it. If you think you cannot manage more debt, it is better not to go that way. It is quite tempting to make purchases with a credit card so you should be cautious and spend only up to a manageable limit.

When signing up for a travel credit card, you should be extra cautious. Read the terms and conditions especially those around reward earning and reward redemption. Remember that the reward programs have been designed in a way that they benefit the bank hence the terms and conditions will be laid down by the issuer. When you are confused about these, overspending is natural. So take care of a few important things-

* Pay your outstanding amount in full every month.

* Do not spend just for the sake of earning rewards.

* Keep track of your payment timelines.

* Check your credit score and put a hold on extra expenses when you think your credit utilization ratio is declining.

* Redeem the rewards while they are still active. Keep a check on their expiration date.

Using credit cards, you can make your dream vacation real at fraction of a total cost.