5 Credit Cards to Help Pay Off Your Vacation Spending

Credit cards with strong balance transfer offers can help.

[DISCLOSURE: Cards from our partners are mentioned below.]

Vacations are expensive affairs, with costs including lodging, transportation and car rentals adding up to a large bill. But they can get even more expensive while you’re traveling, because the vacation mindset can lead you to spend on excursions, fancy dinners and gifts for your loved ones back home.

If your recent vacation splurge left you with a spending hangover and a big credit card balance, you may be worried about all the interest you’ll accrue as you pay off your trip. Credit cards with strong balance transfer offers can help, providing a way to transfer your balance to a new card and pay off your balance interest-free.

To do this effectively, you’ll want to check your budget and see how long you think you’ll need and then compare different cards offerings to find the one that could benefit you the most. To help you get started, here are five credit cards that can help you pay off that vacation splurge.

1. Citi Simplicity

Rewards: None
Signup Bonus: None
Annual Fee: $0
Balance Transfer Fee: $5 or 3% of the transfer amount, whichever is greater
Annual Percentage Rate (APR): 0% intro APR for 21 months, then variable 14.49% to 24.49%
Why We Picked It: Citi is currently offering one of the longest 0% intro APR periods in the business. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)
To Pay Off Your Vacation: With 21 months with no interest, you’ll have nearly two years to pay off your vacation. Plus, there are travel protections, including car rental insurance and emergency assistance, for the next time you take a trip.
Drawbacks: There are no rewards programs with this card, and you’ll pay a balance transfer fee.

2. Discover it Card

Rewards: 5% cash back on rotating purchase categories, 1% cash back on everything else
Signup Bonus: Discover will match all cash back you earn in the first year.
Annual Fee: $0
Balance Transfer Fee: 3% of the transfer amount
APR: 0% intro APR for 14 months, then variable 11.99% to 23.99%
Why We Picked It: You can pay off your vacation balance over time and earn cash back on purchases.
To Pay Off Your Vacation: You’ll get 14 months to pay off your vacation with no interest. You’ll earn 5% cash back on quarterly rotating spending categories and 1% cash back on everything else.
Drawbacks: If you don’t want to keep track of spending categories for cash back, this card requires too much effort.

3. Barclaycard Ring Mastercard

Rewards: None
Signup Bonus: None
Annual Fee: $0
Balance Transfer Fee: $0
APR: 0% intro APR for 15 months, then variable 13.99%
Why We Picked It: Balance transfers cost nothing with this card.
To Pay Off Your Vacation: Balance transfers get 15 months interest-free. You’ll also save on fees, as this card has no balance transfer fee.
Drawbacks: There is a profit-sharing feature called the Giveback program, but you have no control over it and there are no binding obligations for the card issuer.

4. BankAmericard Credit Card

Rewards: None
Signup Bonus: None
Annual Fee: $0
Balance Transfer Fee: $0 for balance transfers made within 60 days of opening your account. After that, the fee is $10 or 3% of the transfer amount, whichever is greater.
APR: 0% intro APR for 15 months, then variable 12.99% to 22.99%
Why We Picked It: This card is another strong choice for avoiding balance transfer fees.
To Pay Off Your Vacation: If you transfer your vacation balance over in the first 60 days, you’ll avoid all transfer fees. After that, you have 15 months to pay off your trip with no interest.
Drawbacks: If you don’t transfer your balance in 60 days, you may end up with a higher balance transfer fee than some competing cards.

5. Chase Freedom Unlimited

Rewards: 1.5% cash back on every purchase
Signup Bonus: $150 bonus cash back when you spend $500 in the first three months
Annual Fee: $0
Balance Transfer Fee: $5 or 5% of the transfer amount, whichever is greater
APR: 0% intro APR for 15 months, then variable 15.74% to 24.49%
Why We Picked It: There’s a strong interest-free intro period and you’ll earn cash back on all purchases.
To Pay Off Your Vacation: You’ll get 15 months to pay off your vacation balance without interest. And, you’ll get 1.5% cash back to help you save for a future trip.
Drawbacks: Depending on your balance, the balance transfer fee may be higher than some other options.

Choosing a Card To Pay Off Your Vacation

With any balance transfer card, you’ll need to check the APR that activates after the 0% intro period. If it’s greater than the interest on your current credit card, you’ll have to be careful. If you don’t pay off your vacation before the intro period expires, a card with a higher APR will hit you with worse interest than you already have.

You’ll also want to evaluate the balance transfer fee. Some cards don’t have balance transfer fees, while others will charge a flat fee or a percentage of your transfer amount, whichever is greater. Depending on the cost of your trip, these fees can get expensive. If the card only offers free balance transfers for a short time frame, you’ll want to make sure to transfer your balance immediately.

Paying off your entire vacation within the intro period is what is likely to save you the most money, so you may want to calculate the monthly payment needed to do that. Using your card for everyday spending will add to your balance, so if your priority is to pay off your vacation, you’ll want to limit purchases on your card until the trip is fully paid off.

What Credit Is Required For a Card To Pay Off a Vacation?

Cards with strong balance transfer offers may require good to excellent credit. You should know your credit score before you apply to get an idea of if you’ll qualify. You can check two of your credit scores for free at Credit.com so you have a better idea and don’t get hit with that inquiry just to get denied.

Image: mapodile

At publishing time, the Citi Simplicity, Discover it, Barclaycard Ring Mastercard and Chase Freedom Unlimited credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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Things You Need to Know if You Want to Master Your Money

master-your-money

It’s ironic people shy away from talking to others about money, considering everyone has to deal with it. But instead taking advantage of this shared experience, a lot of people keep their questions to themselves and outwardly pretend they understand what they’re doing with money. Only once they’ve dug themselves in a hole do they start asking for help.

No one is born understanding personal finance. It’s mostly on you to figure it out as you go, which doesn’t always work out well.

“Typically in America you don’t learn about these things — you don’t learn about debt and interest,” according to Alex Sadler, managing editor of Clark.com, the namesake site of personal finance and early retirement icon Clark Howard. “You’re handed a credit card … and it’s up to you to read the fine print. People get into serious trouble.”

Sadler knows this not only because of the people who ask questions on Clark.com but also because of her own experiences. “I maxed out credit cards, I had a student loan I didn’t understand, and living that way and not changing my lifestyle, I realized that that was going to prevent me from doing things in my life that I wanted to do.”

Ideally, people would get to know how money and credit works before they start using it, not the other way around. But that backwardness is often the reality of Americans’ personal finances, which is why Sadler and the Clark.com team started a new project called CommonCents.

“A lot of problems people face is not understanding what they are trying to tackle,” Sadler said. “A lot of times people … they think they have tried (to get out of debt) and they just don’t understand how it all works and how to make that attempt and effort successful.”

We asked Sadler about some of the core concepts that people need to know — but often overlook — in order to master their finances. Here’s what she said.

1. Understand Interest

Sadler said this is a common issue among people who reach out to Clark for help getting out of credit card debt.

“A lot of people think because they’re paying the minimum monthly payments they’re not getting charged interest,” she said. This, of course, is totally false. It’s not that making the minimum monthly payment isn’t a way to get out of debt — it’s just that it can take an extremely long time.

So, how does interest work? As far as credit cards go, you can get a sense of it by using this free credit card payoff calculator (and if you have credit card debt, the tool can help you make a plan to pay it off.)

2. Learn What it Means to Budget

It’s perhaps the core tenet of personal finance: Budgeting. But you can’t hope to budget if you don’t really understand what it means.

“Budgeting means making sense of your money: How much money are you making? How much money are you spending?” Sadler said. Budgeting, no matter how you do it, boils down to one thing: “Spend less than you make. You’re living paycheck to paycheck? You’re not spending less than you make.”

That brings us to her next point:

3. Know Your Numbers

“The majority of people that Clark talks to about debt, the first thing he asks is, ‘OK, you have credit card debt — how much do you owe?’ The majority of the time, this person asking the question does not know the answer,” Sadler said. “How do you plan to pay off your debt if you don’t know what you’re facing?”

That’s only part of the spend-less-than-you-make equation. Knowing your take-home earnings, your debt, your spending, your assets — these are all things that can help you make smart financial decisions every day that will also make sense years in the future, Sadler said.

Image: macniak

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I Got a $6,000 Windfall. Which Credit Card Should I Pay Off?

which-credit-card-should-I-pay-off

One of the hardest things about paying off debt is figuring out where to start. Should you go after the biggest balance first? Or would it make more sense to start knocking out some of the small stuff? One of our readers found themselves in such a dilemma:

I received a windfall of $6,000 and I want to pay off 2 credit cards entirely, but my husband wants to pay down one for $11,000. Which would be the best idea?

Like all financial decisions, each of these options has its pros and cons. And while we don’t know the interest rates on these credit cards, we can still go through some of the things our reader may want to consider before putting that $6,000 to use.

What Option Saves You the Most Money?

Again, we don’t know the interest rates on these debts, so the reader has to do a little math. A credit card debt payoff calculator (we have a free one here) can help them figure out how much money they could save in each scenario. In many cases, it makes sense to go after the balance with the highest interest rate, so you can reduce the amount you pay in the long run. But a card with a low interest rate and a high balance can also end up being really costly if you take a long time to pay it off. It’s really important to run the numbers when making a debt-payoff decision.

How Do These Decisions Make You Feel?

There’s a lot to be said about leaving emotions out of financial decisions, but a little can actually be helpful. Paying off two credit card balances can be really satisfying, and you’ll have two fewer things to worry about. On the other hand, making a dent in an $11,000 credit card balance can feel like incredible progress. Staying motivated is crucial to getting out of debt, so if there’s an option that excites you the most, it may be the right choice, even if it doesn’t save you the most money over time.

What’s Your Credit Like?

One of the most important aspects of your credit score is your amount of debt and how much of your available credit you’re using. To figure that out, you add up your total credit card balances and divide it by your total credit limits — that gives you your credit utilization rate, which credit scoring companies advise consumers to keep as low as possible (preferably below 30% and, ideally, below 10%). As our reader considers putting $6,000 toward their overall credit card debt, no matter how they distribute that money, they’ll lower their credit utilization rate.

The utilization rate on individual cards also plays a part in credit scores. If one of those cards is maxed out, it could help their credit scores to lower that card’s balance. (You can see how your credit card debt, and other things, are affecting your credit by getting two credit scores for free on Credit.com.)

It’s unclear from the reader’s comment if the credit card debt belongs to one person or both individuals. Each person has their own credit score, even if they’re married and have joint accounts, so that’s something for the reader to consider as well. Say the two credit cards the reader wants to pay off are their only credit cards and their credit score is suffering from the high balances. Paying off those cards would help their credit score, which may be important if the couple wants to buy a house or a car in the near future.

There’s not a single “best” answer to our reader’s question, but they can arrive at a smart decision by considering the outcomes of each possible choice and understanding how it could affect their financial future.

Image: AleksandarNakic

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