According to Marketwatch, 75 percent of Americans have gone into debt in order to have a vacation. Also, Marketwatch found that 55 percent of all Americans do not take their vacation plans into their budgetary considerations, despite the fact that they tend to spend around $1,000 per year on vacations.
At Alamo Associates, a company that helps consumers who are struggling under heavy debt loads. we are often asked by clients how to use credit cards responsibly while on vacation in a foreign country. The following is some of our advice on foreign travel and credit card use.
Why Not Carry Credit Card Debt –
It may seem so convenient and easy to use credit cards and not have to worry about paying for the entire balance off this month, but credit card debt can snowball into financial ruin. Credit cards today carry high interest. In fact, the average credit card interest rate as of December 2019 is hovering around 17 percent. At such high interest rates, many consumers pay little of the principle each month. Thus, they end up in debt that never ends.
If the economy goes into a recession, as is being predicted, many people will be laid off of their jobs and will be unable to make their credit card payments. When this happens, their credit scores will go down, and they will find it hard to finance really important purchases, such as a car or a home.
How to Finance Your Vacation Responsibly –
Begin With a Budget –
In your budget, take into account your monthly income and expenses as well as expenses that come up yearly, like vacations and auto repair and registration. Come up with a figure for your total monthly expenses. Compare this to your income. This will show you if you can even afford your vacation.
Cut Unnecessary Expenses as Needed –
If you have a shortfall of income, you will need to cut unnecessary expenses and find more income sources.
Save for Vacation Expenses in a Free Debit Card –
There are some free debit cards that allow you to save a portion of your paychecks each month. One really great option is American Express Bluebird, but there are others. Save up each month for your vacation right in your free debit card account. In this manner, you will not be putting yourself into debt in order to have a vacation.
Use the Credit Cards Wisely –
According to Nerdwallet you should take your credit cards on your vacation but only two. One should be a Visa and the other should optimally be a MasterCard. They suggest taking two cards in case one is compromised in some way.
When you get home, you can take the contents of the debit card that you filled and pay off your credit card balance immediately. Paying off the balance immediately allows you to use some of the powerful perks that go along with your credit card, while avoiding paying interest.
Other Important Tips –
Nerdwallet had a few more tips on how to use your credit cards safely and responsibly for foreign travel:
Call the card issuer and inform them of your foreign travel in order to avoid getting locked out of your account because of suspected identity or card information theft.
Pick one of the rare credit cards that does not incur foreign transaction fees. These fees are around 2 to 3 percent.
Always pay in the local currency because dynamic currency exchange is pricey.
If it is too late, and you already have dug yourself into heavy credit card debt, call us at Alamo Associates. We have solutions to high-interest debt that are at a lower interest rate and involve only one payment each month. Our solutions will help you dig out of high-interest debt for good
