When you are planning a trip, you need to consider all your options. Whether this would be the best hotel to stay at, the sites that you must see or the way you pay for the adventure- all the decisions are important! Paying for your trip and also using cash while overseas are two very important things to think about before you jump on a plane. Two payment forms you should definitely consider are loans and also credit cards. But which is better to use? Should you take out a loan or use a credit card when traveling? Let’s find out!
Better Interest Rates
Saving money should always be a priority when planning a trip (and in life in general!). When comparing loans to credit cards, loans almost always have better interest rates. When you take out a loan, you will be given a flat, steady rate that you will pay for the life of the loan. Your monthly payment will be the same each month and you can plan your budget around this amount. On the other hand, credit cards tend to have much higher, variable interest rates. Your monthly payment may fluctuate each month, changing based on the high interest rate you are paying and the amount you put on the credit card. This can cost you a lot, especially if you only make minimum payments each month. Taking out a loan to pay for your travel is a much more consistent and cheaper method of paying.
Faster Access to Money
You may be under the assumption that getting a credit card is easy and fast. While it may be easy to apply for a credit card, you will have to wait around a week or longer before you actually receive the card in the mail. When you apply for a loan, you can get the money right away. Some loans will even get cash in your account within the same business day! When you have access to instant money like this, you can book your trip right away, taking advantage of any deals that you may find.
Ability to Use Cash
When you are overseas, you will likely need to have at least a little bit of cash on hand. If you are relying on a credit card to fund your travel, getting access to cash will be very expensive. Yes, you can usually use an ATM to get a cash advance on your card but these will cost you. Credit card cash advances often have much higher interest rates in addition to fees that the card will charge just to complete the transaction. If you opt to use a loan to fund your trip, you can get cash any time you’d like, paying no high rates or fees! After all, the loan will be given to you as cash that you can access anytime you need!
Loans for Budgeting
Using a loan to plan your travel is actually a fantastic budgeting tool. You can apply for a loan in a specific amount and then know that is the spending limit for your trip. You will know exactly how much your monthly payments will be as well. There are no hidden secrets when using a loan to pay and plan for your trip. A credit card may allow you to spend more than you’d like and your payments at the end of your trip will be unexpected. Take out a loan instead of using a card and plan for your trip in a smart and economical way!