Travel Abroad Without Worrying About Shortfall In Foreign Currency - Featured Article in DNA Money

The holiday season has begun, and travel is on everybody's mind. Be it the much-awaited Christmas break or 'ushering in the New Year' holiday with family or friends, everybody has something planned. When it comes to holidays, especially international holidays, a credit card is a savior and essential in your travel kit. There is always a fear of travelling with foreign currency and running out of it in case an unplanned expenditure comes up. Credit cards eliminate the inconvenience. Here are some tips to keep your finances on point before and after your travel:

Know your finances in and out
Before you start planning an international holiday, investigate your finances thoroughly. Make a checklist of how much you can spend, how much is needed for the vacation, listing out expenses and making sure the credit score is unaffected. It is crucial because though credit cards can save you for the time being, eventually it will affect your finances and that is probably the last thing you want to see after you come back from your vacation. One should always save before taking a vacation because an international holiday can get expensive and you do not want to be broke.

Hot tip: Keep aside an amount every month from your monthly income so that by the end of the year you have enough to spend on your much-awaited travel plans.

Plan your holiday well
Have a plan ready for your finances while you plan your itinerary. When you have a credit card, make sure to use all its advantages while you plan the holiday. Credit cards offer much more than just saving you financially when you have a shortage of cash. When you acquire a credit card they give you offers and discounts on various things.

Booking your travel with a credit card can give you miles that can be redeemed when needed. Most of the travel booking sites give alluring cashback offers on bookings done by credit card, again another way to make use of your credit card in the best possible way. Planning of what documents are needed, your travel insurance, how the finances can be segregated and how you can book the cheapest yet comfortable flights, what is the best time to book the tickets and how to avail the discounts from the credit card are some of the boxes that should be ticked off.

Hot tip: When you apply for the credit card, analyse the deals on them, exhaustively. This helps in getting you a credit card that is advantageous to your lifestyle. Look for cards that allow you lounge access at the airports. These come in handy especially when you need to wait long at the airports during transfers.

Find a loan that's right for you
Loans are a great way to reach your travel goals, and with better interest rates than credit cards, are a much safer way to fund your holiday. However, you do need to approach this sensibly. Don't take a loan just because you can get it. You need to undertake proper research, compare the market, and find whether travel or a personal loan suit your pocket. Take into consideration not only competitive interest rates, but also whether there is fast pre-approval, and any associated monthly fees.

Hot tip: Another option is to take gold loan in case you have gold jewellery available with you. Gold loans, being fully secured against the gold pledged, are cheaper with better interest rates and quickly disbursed without laying much emphasis on the borrower's credit score.

Check credit score
We all know how the credit score can change your financial game. Your credit score should be above 700 for you to apply for a short-term loan for your travel plans (only if you need it) or to get a credit card which can be used internationally with the best interest rate and offers. To balance your expenditure with maintaining your credit score, make sure your credit utilisation ratio is balanced. The moment you get a credit card, it may lower your credit score by a few points but a using your credit score judiciously up to 30-40% of the credit limit and repaying all dues on time increases the credit score much more than what was lost at the time of the application.

Hot tip: If credit cards are used intelligently and paid on time, they are a great way to increase your credit score and help in building a credit history as well. So, having multiple cards is great: 35% of your score is perfect if you pay everything on time, another 30% is the credit utilisation rate and 15% is the length of your history.

Check Credit Card Statements
Understand your credit card statement, statement periods, limits available, payment details and account summaries. If there is any fraudulent transaction, intimate your bank immediately. In case you have gone overboard, consider converting your card spends to Equated Monthly Installments (EMI).

Hot tip: You can also take a personal loan from another bank to pay off your card debt (if you did not take a loan before travel). Choose an option that doesn't hamper your budget and credit score.

Original Source: DNA Money- 1 January, 2019, | Page No 4 |