8 Unexpected Ways a Credit Card Can Save You Money on Travel

By Nick Wharton on 5 May 2016 1 comment

There are plenty of obvious reasons to use a credit card while traveling. For example, it's easier than carrying a lot of cash, and if it gets lost or stolen, you can call your credit card company and you won't be held responsible for fraudulent charges. But did you know that using a credit card actually saves you money on your travels? Here are eight ways that credit cards can save you money on your next trip.

1. Rewards Points

Surely the most obvious way that credit cards can put more funds in your travel piggy bank is earning rewards points. It might seem overwhelming to dive into the world of credit card rewards, but it doesn't have to be.

To start out, simply apply for three of the best travel credit cards for you. Chose two based on a good sign up bonus so that you can get a head start on your points, and one based on a good percentage of cashback return.

Make sure you spend the minimum amount on each card in the first three months to ensure you get your sign-up bonus. Then continue to use the best cards based on their highest earning potential. For example, if one of them offers 3% cash back on groceries, always use that one at the supermarket. If one offers a high percentage on gas, use that at the pump.

If you have a hard time keeping track, you can always put a sticky note on each card. After a while, you won't need the notes anymore.

2. Rental Car Insurance

This is a really easy way to save a few bucks a day on your rental car. All major credit card providers offer good insurance coverage on rentals if you put the full cost of the rental car on your card (obligatory with most rental companies).

Don't pay extra for the damage collision waiver or for extended coverage if your credit card includes it! Many people who don't know about their credit card's coverage buy a ton of extra insurance through the rental company, not knowing that it's already covered on their card.

3. Travel Insurance

This is another place where so many people waste their money because they don't know that their card has them covered. There are dozens of cards that offer complementary travel insurance.

Before paying for expensive third-party insurance, call your credit card provider and ask what kind of travel insurance they include in their policy. You may be surprised to find out that they cover you for more than the expensive third-party insurance you've paid for in the past!

Stop wasting money on extra insurance. Call your credit card provider before your next trip.

4. Rental Car Discounts

Many credit card providers offer discounts if you book your rental car with their partners. If you can't get a direct deal with the rental car agencies, many issuers have their own travel portal sites that allow their cardholders to book travel with exclusive discounts.

5. Lost Luggage Insurance

As someone who has recently been a victim of lost luggage at an airport, I have to say that this is something you may take for granted, but can save you a lot of money.

You may think that when an airline loses your luggage, they'll reimburse you for everything you lost, plus pay you a little extra for your troubles. This simply isn't true with most airlines. While recent laws have been enforced to hold airlines accountable for your belongings, they are still only required to pay you the depreciated value of your used goods.

Credit card lost luggage insurance will help to top up the amount that the airline isn't willing to pay and will even give you a small amount to pay for emergency purchases while the airline tries to retrieve your luggage. That way you can at least pick up some warm clothes, extra underwear, and a toothbrush knowing that your credit card insurance is paying for it.

6. Airline Credits

Some credit cards will actually offer to reimburse a certain amount each year for airline fees and in-flight food and entertainment. At a minimum, most airline credit cards will offer a discount for in-flight purchases.

7. Baggage Fees

These days, pretty much every airline in North America is charging passengers for their first checked bag. Put an end to this by having the right plastic in your wallet.

Again, this is where airline credit cards will come in handy. Most of them will give you a free checked bag, plus for your companions, too. Before you book your flight, make sure you're using the right credit card.

8. Foreign Fees

Most credit cards will charge a 3% foreign transaction fee for using your credit card abroad. This fee cancels out any convenience or advantages of using a credit card abroad. Worse is figuring out whether the exchange rate is going to leave you better off or worse off than the 3% fee.

The good news is that there are credit cards that have no foreign transaction fees. Sign up for one and make sure to use that one on your travels.

The Bottom Line

If you're a disciplined spender, signing up for numerous travel rewards credit cards and putting all your purchases on plastic can save you a lot of money both at home and on the road. Just make sure that you're careful about how many cards you apply for and how you spend.

There's no point in earning points if you are paying 19.99% interest. Be sure to pay off your card each month and abide by the minimum spending for sign-up bonuses and you'll have more money to enjoy (or to save up for your next adventure).

Have you taken advantage of any of these credit card travel savers?

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Guest's picture
Dividend Diplomats

I love having my American Express with me when I travel for the reasons you highlighted in the article. What's cool is that the benefits for all credit cards run deeper than the simple cash back rate the advertise in commercials or online ads. A lot of CC companies now allow you to book through their website and sometimes offer a higher cash back rate for using their service.

Thanks for sharing!

Bert, One of the Dividend Diplomats