Posts Tagged ‘travel’
The short answer is yes. In fact, it can be a great way to avoid late penalties and taking a hit on your credit score while you are on vacation or traveling to an area that you wont have the ability to pay your credit card bills. Many companies and lenders, including Discover and Barclays will allow you to switch your due date as long as it is within that billing cycle.
How is this useful though? In the past if you were traveling you either had to have access to the internet to pay online or pre-pay your statements to avoid any late fees or score penalties. This might still be a great option though because pre-paying statements and getting those balances paid down can free up more spending power without having to worry about going over that magic 30% number we have talked about so many times.
But If you are unable to pre-pay or you know that your budget depends on a check coming in you are able to move that due date and still make on-time or early payments before, during, or after your vacation.
It is important though to stick to your budget each month and especially for your vacation. Be sure to check out 3.5 Tips To Keeping Your Wallet & Credit Safe This Summer before you plan your next summer trip.
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We have all been there. During the summer or during holidays our credit limits get all used up. We all know that we should really try to keep spending under 30% of our limit each month. Things happen though and sometimes we go over. Yes this can and if you do it often enough WILL hurt your credit score.
Here’s the good news though…
If you have been making regular payments and have a fairly established history on your cards, you can actually ASK for a credit line increase. Increasing your credit line will reduce your credit usage and improve your Utilization Ratio. Thus you will see a relatively fast credit boost. And it will free up some room on your credit line for those budgeted vacation expenses.
Here’s the bad news…
If you don’t practice self control when it comes to your spending, it’s a really fast way to rack up a lot of debt. Now that you got that nice boost in available credit you need keep spending down. And always make sure you are paying your card regularly and if possible paying your entire statement balance each month!
Why you should do this before you travel: Well traveling can be expensive and this might be one of those out of the ordinary months where you spend over 30% of your credit line. If you have been saving though and have the money to pay for your vacation, you now need to have the credit. A boost in your credit utilization can free up your credit line for travel and other vacation expenses while either boosting your score or keeping it where it is now. And that’s a whole lot better than your FICO Score taking a hit when you are trying to enjoy your much deserved family time.
One more thing before you go outside to enjoy the summer weather this weekend… A lot of building and keeping a great score is self control and perseverance. The system is complex and can be confusing at best. But keep at it! Always keep working and never give up even if you feel like you have hit a wall. And remember it takes a lot of self-control to keep that score up.
But if you plan smart and ahead of your vacation you can have just as much fun and keep your credit and wallet intact.
1) It’s a smart idea to lower any debts well before the planned vacation. – Part of what makes up your FICO Score is Credit to Debt ratio or your utilization ratio. This really means how much of your credit line are you currently using? Paying down your balance frees up more of your credit line to use. Traditionally we should be spending between 10%-30% of your credit line. But remember… Never spend more than you have in the bank.
2) Create a daily cash or credit usage allowance: Having cash on hand is always a good idea. Especially if you are traveling internationally and have a card that charges International Transaction Fees. No matter what method of payment you are using you need to be setting daily spend limits. Basically make small daily budgets within your total budget.
- For example, plan to spend a total of $500 on food for the total trip? Maybe one day you will spend $30 and another you will spend $60 based off what you have planned for those days.
- If you go over your daily cash allowance or credit allowance dipping into the next day is alright but you will have less to spend later on. If you do need to spend over your daily allowance, try to spend that much less the next day to keep the rest of your budget intact.
3) If you ARE going to use a credit card on vacation (domestic or international) it is important to include those charges in your budget planning! When you get back from vacation and you get your card statement you will need to be able to pay for the transaction you made while on vacation. So be sure that in the budgeting process you take into account what your daily card limits are. Make sure you stick to them while on vacation, and make sure you move that money to a savings account or be sure to keep that in your bank before vacation to pay your bills after.
3.5) If you are traveling internationally and you have a card that charges International Transaction Fees you need to add about 5% for each transaction. This is important to take into account because by the end of your trip those fees can really add up and be a problem.
Its important to protect your credit this summer! The Starter’s Guide To Building And Protecting Your Credit can keep your credit in shape.
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Summer is time to travel with friends and family! And if you have saved up and budgeted to travel internationally there are a couple things to think about before you get away.
International travel is expensive on its own so its silly to spend even more especially when you don’t need to. Its hard and risky to carry giant wads of cash around with you and in some countries small denominations are in coins which can be cumbersome to carry.
That means you will without a doubt use your credit card at some point on your journey.
It’s a good idea when you are planning your trip to first check out your credit cards. Many credit cards carry a 3%-5% foreign transaction fee. This can be a killer especially when you have your trip budgeted. Adding an additional 5% to each transaction can really hit your bank account and eat away your credit limit pretty quickly depending on how big it is.
So how do you avoid these foreign transaction fees and save more money this summer? Well there are many cards out there that don’t carry any foreign fees. This is easy to check for and if you have been building good credit you should be approved no problem! Even with less than great credit there are some cards that still do not carry a foreign transaction fee.