8 Money-Saving Tips for Inexpensive Trips

More tips on how to use credit to your advantage without creating vacation debt.

The goal of all the tips described in the video is to minimize your vacation cost as much as possible. If you take inexpensive trips, you’re less likely to rely on high interest rate credit cards to cover the costs. That helps you avoid doubling your trip cost with interest charges.

Still, just because you don’t have to rely on credit, it doesn’t mean that you won’t use your credit cards. Booking flights, making hotel reservations, getting a rental car – they’re all more convenient with a credit card. In fact, if you don’t have a credit account when you rent a car, they run a credit check on you.

So, in many cases you need credit to make your trip happen. What’s more, you can earn some valuable rewards if you use certain credit cards to plan your trip. As long as you have a good debt management strategy in place, you can charge what you need without incurring a lot of extra charges.

Step 1: If you want to maximize any rewards, start with zero balance

Credit card rewards can be valuable, but they’re quickly offset by interest charges. In most cases, the value of rewards earned is offset within two billing cycles once you apply interest charges. So, you have to be smart about how you use any travel rewards cards.

This is how you avoid interest charges entirely when you charge something for your trip:

  1. If you start and end a billing cycle with a zero balance, no interest charges apply.
  2. Make sure the travel rewards credit card you use to make reservations has a zero-balance starting that billing cycle.
  3. Once you make your reservations, pay off the full balance within that first billing cycle.

If you follow those three steps, no interest charges apply to your purchases. Thus, you earn the full value of your rewards.

Step 2: Low APR is better for anything you can’t pay off fast

If you make charges that you can’t pay off within one billing cycle, think carefully about which card you use. For charges that will take a few billing cycles to repay, rewards don’t matter. Again, if you earn rewards valued X dollars and interest charges cost double that value, you didn’t actually earn anything.

In this case, you should choose your credit card with lowest APR to make these charges. Lower APR means less interest charges with each billing cycle that passes. You minimize the cost by choosing a different card than your travel rewards credit card. Rewards almost always mean higher APR, which leads to higher costs.

Step 3: Consider prepaid credit for your trip

If you don’t want to mess with cash or currency exchanges when you travel internationally, consider using prepaid credit. A prepaid credit card functions much like a regular credit card. You swipe the card just the same. In fact, you can even find prepaid card with EMV chip technology so you can use them overseas.

The only difference is that you load the card with funds ahead of time and money gets deducted as you make transactions.  This also helps you avoid interest charges entirely to help keep inexpensive trips inexpensive. In addition, it gives you a little protection against identity theft. If the card gets stolen, thieves only have access to the money loaded. And federal law now says these cards have the same limited ID theft liability as regular credit cards.

So, get a prepaid credit card for your trip. Load it with the money you have saved up for your vacation. Then only make purchases with this card. When funds get low, it’s time to spend the day relaxing or find some fun, free activities.