Don't Let Your Vacation Wreck Your Credit

Article Updated by Brian Acton May 22, 2018

Summer vacations are supposed to be carefree and enjoyable, with your biggest challenge being the choice between flip-flops and sandals. But in reality, you need to do a little proactive planning to keep your finances safe.

Credit never takes a holiday, and ignoring it on vacation could have long-term consequences. Here are seven tips to avoid wrecking your credit on your summer vacation.

Set a Budget

It’s okay to splurge a little bit on your summer vacation, but don’t go overboard. Set a budget before you go on vacation, give yourself a little wiggle room for a fancy dinner or souvenirs, and then commit to the spending limits you’ve established.

If you plan on paying for your vacation with a credit card, only charge what you can afford to quickly pay off. That way, you’ll keep your balance low and avoid interest charges.

“Before you go into debt because of travel, remember your travel expenses could cost you more in interest over time,” said Natasha Rachel Smith, Personal Finance Expert at TopCashback.com. “Rule of thumb is to never overspend on travel, whether you’re booking the vacation of a lifetime or going away for the weekend. Try to save money everywhere you can or [establish] a travel fund to help you put money aside to cover all your travel expenses.”

Plan for Contingencies

Vacations are vulnerable to unforeseeable mishaps. You should plan for common contingencies that might befall you on your trip. If you’re renting a car, pay for rental insurance or use a credit card with complimentary coverage. Make sure you have some kind of health or hospitalization coverage at your destination.

Preparing for contingencies will leave you less vulnerable to unexpected, unaffordable bills. When planning your trip, check what travel protections (if any) your credit card issuer provides.

Protect Your Money and Identity

When on vacation, you should safely guard your finances and identity. Your wallet and personal documents could be vulnerable on the beach, in your hotel room, or even in your pocket, so keep a close eye on your personal belongings and don’t flash too much cash around.

Your internet-connected devices should only be connected to secure networks. “Whether you’re logging into Facebook or checking your bank out, you should always be cautious that your information could be compromised,” said Smith. “When the connection is unsecured, others may see your information such as email passwords and website logins. Unsecured networks [make] it easy for others to steal your information.”

Don’t Neglect Your Bills and Utilities

Your utilities and other financial commitments don’t take vacations, and a missed payment on your credit report can seriously damage your credit score. Make sure you’re up to date on all your bills before you leave. You might also want to pause or adjust any utilities you won’t be using while you’re away – for example, you can decrease your home’s energy usage and travel proof your cell phone.

If you’re traveling abroad, springing for an international phone or turning off your data will help you avoid data roaming charges in the thousands of dollars.

Cook for Yourself

Dining out can be an enormous travel expense. If you’re worried about racking up a large credit card balance, try renting an affordable place with a kitchen. You can slash the cost of your trip by cooking some meals (or enjoying a bottle of wine at home rather than going to the bar).

Avoid Unnecessary Fees

Plan your trip to reduce the number of fees paid to hotels, airports, parking lots, valet services, and more. These unnecessary fees can add up and break your travel budget.

If you’re going out of the country, take a credit card with no foreign transaction fees. You should also try to avoid using your credit card to get cash, as you’ll pay dearly for the privilege.

Check Your Credit and Statements When You Get Home

Once your trip is over, check your bank and credit card statements for any unauthorized charges. If you catch any, you should report them immediately to limit your liability and get them resolved. You can also visit AnnualCreditReport.com to check your credit report for any signs of identity theft. To check the impact your vacation had on your credit, you can get your credit score, updated every 14 days, for free at Credit.com.

Vacations should be memorable, but only for the right reasons. Make sure your vacation remains a happy memory by keeping these tips in mind when planning for your next trip.

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Image: iStockphoto

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