Credit Cards

Should I book a vacation with a 0% APR credit card?

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It may seem like a good solution, but is it?

Key points

  • You may be tempted to book travel plans with a credit card with a 0% interest rate.
  • While this can be a good strategy, it can also backfire if you don’t pay soon enough.

Now that summer is approaching, many people are serious about finalizing their vacation plans. If you’re one of them, you may be thinking of charging your trip to a credit card with a 0% introductory APR. Doing so may seem like a good solution, but you’ll need to be careful when going down this route.

Will you really pay off that balance on time?

Some 0% interest credit cards come with a longer introductory interest-free period, for example, 18 months or even longer. Others give you a year without interest.

It’s easy to see why it might be tempting to book your trip with one of these cards. That way, you have time to pay off your balance without accumulating interest that makes your vacation cost more.

However, the danger is that eventually, the 0% interest period will come to an end. And if you haven’t paid your balance by then, you could keep one batch interest on the amount you still owe. Therefore, as a general rule, it is not a good idea to charge any expense to a credit card unless you already have the money to pay it, or you are sure that it will be received shortly.

Let’s say you’re looking for a $3,000 vacation, but you already have that $3,000 in your savings account earmarked for travel. In that case, there’s little danger in charging your spending to a credit card, one with a 0% introductory APR, or any other card, for that matter.

Similarly, let’s say you’re charging for a $400 flight but you know your next paycheck at the end of the month will more than cover that expense. That’s also a pretty safe move. What you shouldn’t do, though, is cash in on a $1,500 trip knowing you don’t have the $1,500 in savings and aren’t sure if your next paychecks can cover that cost.

There may be a better credit card to use

Some introductory 0% APR credit cards offer benefits like cash back on purchases. But it’s worth comparing those rewards to the rewards another credit card might offer you.

Let’s say you already have money saved for a vacation, and your primary motivation for using a credit card is to earn rewards. In that case, you’re better off booking your plans with a travel rewards credit card. Some travel cards come with money-saving perks like discounts on inflight purchases and free checked bags, so before you assume a 0% introductory APR card is the best way to go, look into other options.

All in all, booking travel with a credit card is usually a smart move. That way, you will not only have the opportunity to get rewards, but also enjoy certain protections. But if your plan is to charge a trip you can’t afford right now with a 0% introductory APR credit card and hope for the best, you might want to reconsider, before you end up with a pile of expensive debt. can’t pay easily.

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