Are you planning to embark on a new adventure, have leisure time, or discover a new culture? Travel can undoubtedly open new possibilities and contribute to your personal growth. However, due to increased costs, planning a trip during the year-end can take time and effort.
As global trends show an unprecedented increase in travel, financial institutions have not lagged in creating products specifically for avid travellers. Travel cards are not just safer and more convenient; these cards are especially beneficial for saving extra on your long-awaited vacation plans. Travel cards can offer higher reward points on travel spending.
They can include benefits such as bonus rewards on flights, trains, and hotel bookings or specific benefits like low forex markup fees and lounge access. One should always assess their expected spending and the regularity of their spending on travel to choose the right credit card.
Types of travel cards
Travel cards can be of two types:
Prepaid travel cards: These cards are most suitable for international travel. Such cards can be loaded with the forex of your choice and can be used as debit cards on your next international trip. They help you save on forex conversion fees (Typically 3%) charged by your rupee debit or credit card issuer. They can be quickly loaded with additional cash online. They also provide an ATM withdrawal facility whenever you need to make cash payments.
Travel credit cards: Travel credit cards are created explicitly to reward frequent travel customers. These cards not only make the cardholder's travel experience smoother and more comfortable by providing benefits such as complimentary access to airport lounges, 24-hour concierge service, and insurance benefits, but they also, in most cases, offer a higher reward rate on travel-related spending such as flight bookings, hotel reservations, and so on. Many travel credit cards earn AirMiles that can be redeemed for award flights (free flights) or class upgrades with partner airlines. The benefits of travel credit cards can be rewarding and assuring for travelers.
Travel credit cards can be subdivided into two categories:
Co-branded credit cards: These cards provide higher rewards and benefits because they usually offer a 1:1 conversion of reward points to frequent flyer miles. Accumulated miles can help cardholders earn reward tickets faster and more frequently. Co-Branded cards can also provide additional perks such as cashback, same-cost EMIs, and free upgrades, to name a few.
Travel benefit credit cards: These cards usually offer higher reward points on travel spending and can include benefits such as low forex markup fees and lounge access. One should continually assess their expected spending and the regularity of their spending on travel to choose the right credit card. People who frequently travel outside India could opt for a card with low or no forex fee. In contrast, frequent domestic travellers could opt for co-branded IRCTC or airline cards.
Travel card can also benefit cardholders with additional benefits, such as:
No fraud risk
Among the most significant disadvantages of carrying cash is the risk of theft. Additionally, using debit cards exposes you to the risk of phishing, where the bank account information can be stolen and used for unauthorised activities. In these circumstances, you are obligated to pay the loss. However, you are protected from liability for fraud if you use travel credit cards.
Insurance against mishaps and accidents
Travel credit cards often come with bundled travel insurance. Travel insurance could include lost or stolen items, misplaced luggage, and last-minute cancellations. The insurance can vary for different cards, and it's advisable to review the card's features when applying.
Finally, there is no doubt that travel cards are beneficial, but keeping specific pointers in mind while spending on a trip with a travel card is essential:
Planning the budget: Before you start spending on your trip, it's imperative to know the budget for the trip. This factor could keep spending on track and prevent overspending.
Research: Before using a travel card, a cardholder needs to be aware of the perks and offers provided by the credit card. It helps to save extra before incurring the expense.
Making payments on time: The cardholder must know the due date to assess when the expenses charged to the card would be due. It's essential to make the payment on time as it directly impacts the credit score.
Travelling with more than one card: Sometimes, a cardholder might face an issue with one travel credit card, so it's crucial to have an alternative credit card.
Travel Cards, as opposed to cash, provide numerous advantages and safeguards when travelling. Knowing these benefits before you embark on your dream vacation will ensure your experiences are enriching and hassle-free. Travel more, Grow more.
Gaurav Chopra is the Founder & CEO of IndiaLends-an online marketplace for credit products