In my day job, I work for a credit card company. I don’t mention who I work for on this blog, for privacy reasons, and I’d like to make it clear this post is not on behalf of, or endorsed by, my employer. These are my own words and whilst I’ve used my knowledge to make sure the information is accurate, different companies may operate slightly differently. I would recommend checking things with your own credit card company before relying on any of the information in this post.
Why book a trip on a credit card?
When you’re booking transport or accommodation, which payment method you’re going to use for it is probably the last thing on your mind. If you’re really sensible, you’re probably not going to be considering booking a trip if you don’t have the money sat in your bank account to pay for it, and, honestly, that’s the best way to think. Getting into debt for a holiday isn’t a good idea and I’d advise against it. That said, there are some real benefits to booking a trip on your credit card, rather than your debit card, and I’ve outlined them in this post.
Cashback and Air Miles
Some credit cards offer cashback when you pay for things on them and if yours does you may find you earn a little something for booking the trip on your card. Even a couple of percent on a few hundred pounds for a trip adds up so it’s worth using a cashback card for all trip related spending if you can.
If you’re lucky enough to have a cashback card, give the company a call if you’re not sure how their cashback works, and they will be able to explain things to you so you can check you’re making the most of it. You may even have a card that allows you to collect air miles, or your credit card may give you access to certain airport lounges. Speak to your credit card company to find out how this works if you think this applies to you.
When something goes wrong-Section 75 and dispute claims
When a trip costs over £100 and less than £30,000, and you have paid some of that cost by credit card, you automatically have Section 75 protection. This means that if there’s a problem, like the airline goes bust, you can raise a claim with the credit card company for a refund. I’m not going to write pages about Section 75 because this post will get very jargon filled, but effectively, as long as the item costs more than £100 (so, if you’ve booked a single flight to Spain for £50 and then another separate return flight in a different transaction for £50, you’re not covered, but if the outbound flight is £105, or it was a round trip made in one single booking costing £120, you are likely to be) and as long as you’ve paid the merchant direct (so you’ve paid Easyjet, not paid via Paypal who have then paid Easyjet) chances are you’re covered. You can read more on Section 75 if you need to, and it’s very handy to know your rights here. When Flybe went bust, we logged loads of Section 75 claims for our customers.
With a credit card, if you’re not covered under Section 75, you can still raise a dispute. This will be investigated by the company and they will do their best to try to recover the money for you, although they will make a decision after an investigation. It’s always worth asking to log a dispute if you’ve had an issue with your trip-if your flight was cancelled, your hotel room was nothing like the description or something else went wrong. Call your credit card company and have a chat with them, and they’ll be able to run you through your options and their processes.
Do I still need travel insurance?
I want to be very clear in saying that paying with a credit card doesn’t, and shouldn’t, stop you needing travel insurance. Travel insurance is needed for if things go wrong (flights cancelled, delays, you get ill or injured on holiday, you get ill or injured before the holiday, your bags are lost or stolen) and it’s important not to rely on your credit card company fixing something if you have a problem, if you’ve not got travel insurance. A credit card company can only raise a Section 75 or Dispute claim if the merchant is in the wrong-so if your camera gets stolen, if you miss your flight because there’s a big traffic jam on your way to the airport or if you’re poorly, it can’t be argued that the company was negligent. That’s when you’d claim on your travel insurance instead.
What evidence do I need to claim?
There is no simple answer to this, and your credit card company will guide you. But, in simple terms, you’ll need as much evidence as you can provide. If your flight is cancelled, keep the email from the airline saying it’s been cancelled. If they’ve refused to refund you, get that in writing. Get the names of people you’ve spoken to and the dates and times of any calls. If your hotel room has a broken bed or there’s some other problem, take photos or a video. Make a note of when you spoke to the hotel manager, what they said, and follow this up with an email if you’re able to. Anything you have in terms of evidence will be useful to your credit card company.
Can I use my card in an emergency?
The short answer is yes, you can. I always travel with a credit card, and I make sure it has plenty of available credit. This means if I suddenly have to get home quicker than planned, I can book another flight. If my bag goes missing and I need to grab some clothes I know my insurance will later reimburse me for, I can do that. If I need cash, I can withdraw it from the credit card, although this should be a last resort. Withdrawing cash often comes with a withdrawal fee, daily interest, and withdrawals may be reported to your credit file, so don’t rely on this as anything more than an emergency measure, and NEVER withdraw cash to go and pay for something in a shop if you could have paid by card in the same ship.
Some hotels take a security deposit, to be returned when you leave, and putting this on a credit card usually means they’ve refunded it before your bill comes, so you’ve not had to find that money out of your holiday budget. Nine times out of ten hiring a car means you’ll need a credit card as well, they usually want a deposit on a credit card and don’t accept a debit card-many a time a customer has called me from a hire car company’s airport desk, without enough available credit to pay the security deposit, which is far from ideal for them.
When you’re using a credit card abroad do be aware that some credit cards charge a non sterling transaction fee to use the card abroad, so find out if yours does and factor that in when working out how much your shopping is going to cost you.
In an ideal world, if you have two credit cards, leave one at home. Email the details of the card to yourself, so that if the card you have with you gets lost or stolen and you need to book a flight home, you can use the details of the card you’ve left at home.
What do I need to know?
Before you use your card to book travel, you need to know a few things. Knowing what date your statement will produce and when your bill is due to be paid means you can make sure you pay every penny back by the payment due date, and avoid being charged purchase interest. It doesn’t make sense to pay £100 plus interest for your £100 flight, if you can pay it on time and only repay the £100 you spent. Purchase interest is charged if you don’t pay your full statement balance by the payment due date, so if your statement is £100 and the due date is 15th February, make sure you’ve paid that £100 by the 15th February if you don’t want to be charged interest on your next statement. Also check the clearing time for your payment-if you pay by bank transfer, for example, and that takes three days to clear, pay it on the 11th, not the 15th!
If you are using your card to pay for a big trip, with a plan to pay it back over a period of time, make sure you know how much your minimum payments will be and that you can afford it. Ring your company if you’re not sure as they should be able to give you an estimated figure, and if your minimum payment is £100 a month, paying higher than the £100 will mean you pay down the balance quicker, and pay less interest overall. Always overpay when you can. Never put travel on a card if you can’t afford to pay it back, as this will have a negative impact on your credit file and mean you risk struggling to get credit, like a loan or a mortgage, in the future. No holiday is worth that.
Before taking your card abroad, make sure you know how much it will cost if you use it. Some cards don’t charge an additional fee for transactions abroad, and if that’s the case it may work out cheaper to use your credit card than your debit card. Others charge a non sterling transaction fee each time you use it, and if that’s 5%, your £100 will cost you £105 immediately. If your card is charging a fee for using it abroad, try to only use it if you really can’t pay in cash.
Some credit card companies ask you to let them know if you’re going abroad, otherwise your card may not work. Check the company’s website and if it doesn’t say whether you need to tell them, err on the side of caution and ring to tell them. Even if you’re not planning to use the card, you never know when an emergency could happen.
What if the card gets lost?
Block the card, immediately. This goes for if you lose your card in the UK too. Most credit card companies will let you do this on their app, if you have it (always download the app!) If you don’t have it, or you’ve lost your phone too, ring the company. You don’t need your card number to block the card. Their 24/7 line will let you block a card, even if the company isn’t currently open. It may be you need to ring again to order a new one, but the main thing is to block the lost one straight away. Worst case scenario, if you can’t ring the company, because you can’t call from abroad, a friend or family member can do that for you. The company wouldn’t be able to discuss your account with someone who isn’t you, but they will be able to block the card.
As I said earlier in this post I work for a credit card company as my day job, and whilst I can’t answer any account specific questions (even if you’re with the company I work for) for obvious reasons, I’m happy to cover any generic credit card related questions, so if you have any, please leave them in the comments.
I prefer credit cards over cash because of the reasons you have explained in this article. For those people yet to embrace credit cards, I think they will learn a lot of this post and at the end of the day, they may start using them.
I’m always terrified of using my credit card. My Mum always says to use it for booking travel but I never knew why. Thank you for explaining the benefits and setting out the way consumers are protected. I had no idea.
Many thanks