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3 Things You Need to Know When Using a Rewards Card for Travel

Thinking of racking up credit card reward points for an upcoming trip? It takes a pretty savvy spender, but if done right, reward point cards can make a huge dent in the price of your vacation. Here are a few things to consider:

  • Pay off the monthly balance: First and foremost, you’re only getting a deal if the rewards points are coming without a cost — otherwise, you’re just pushing money around. If you’re a disciplined spender, will stick to the card for grocery bills and gas fill-ups, and will pay your monthly balances in full, go for it. If you’re not, then you’re paying for your points with your interest payments. Where’s the deal in that?

  • Watch the slippery slope: Many cards offer introductory bonus (like double points) if a certain amount is charged to the card during the first few months. Why? Because the more debt you rack up, the more that you potentially pay back in interest. It makes sense to grab the extra points if you’re prepared to pay the balance (see above), but don’t sabotage yourself by racking up more debt than you’re prepared to pay back.

  • Know the details: Does the card come with annual fees? Are there blackout dates or restrictions on travel? Do reward points have different value if you use them for travel, cash back or other returns? There are other details that can make one reward card better than another.

As is true in most financial situations, advantages lie in planning, discipline and patience. It makes sense to adopt a long view. If you’re living relatively debt free and are comfortable in your ability to stay on track, a reward card can present a big upside. If you’re not sure, however, the risks may outweigh the rewards. No one knows you better than you.