How to pay for holiday travel with plastic and avoid debt

Nobody wants to return from a trip with a big bill to pay.

Hanging onto consumer debt well after a vacation has ended can not only create or add to financial stress as you make the monthly payments, but if you drag the obligation out too long you’ll overpay in financing fees. However, it also makes sense to use your card for travel purchases. You may get fantastic rewards, perks and consumer protection.

This holiday season, give yourself the gift of no or low travel-related bills while still getting all the goodies from your card. Here’s how.

Score the lowest price

You can avoid overspending on getting from point A to point B, says Jennifer Weatherhead, a travel expert from Toronto, by being flexible with dates, especially around Thanksgiving and Christmas. Book your airfare for the day of the holiday or a day or two before and after everybody else is traveling so you can avoid the ultra expensive fares.

For example, a round trip United flight from San Diego to Chicago on Dec. 23 to Dec. 27 is $737, but if you arrive on the 25th instead it drops to $634. Most airlines have seven-day calendars for easy price comparisons.

Staying in a brand name hotel? You may have unspent hotel points that you’ve forgotten about. “If you have enough you can get a night or two free with that loyalty program,” says Weatherhead.

Also, look for deals you can get when you purchase travel-related services prior to leaving. Maybe you’re taking a winter cruise on Holland America. If so, you’ll get a 25 percent discount when you book appointments at the spa before the ship leaves the dock. So not only will you be all paid up, you’ll pay less.

Pay with the right card

Jeremy Scott Foster, a Los Angeles-based travel expert, says travel credit cards are a powerful tool for leveraging all kinds of perks and bonuses for holiday excursions.

“Some credit cards offer 3, 5 and even up to 10 times the points on select travel purchases,” says Foster. “So, if you’re paying for travel with plastic, you may actually get a good chunk of that value back in points.”

While cash will keep you out of debt, you won’t get rewarded this way with a debit card. You’re leaving money on the table if you don’t take advantage of the rewards you can rack up.

“I recently bought a full-price flight to see my family for Thanksgiving,” says Foster. “By purchasing on my Platinum Card® from American Express through the Amex Travel portal, I received 5 Amex points for each dollar I spent on that flight. At an approximate 2 cent valuation per Amex point, that’s like receiving 4.5 cents back on every dollar. And depending on how you utilize those points in the future, they could end up being worth a whole lot more than that.”

Redeem your accumulated rewards

The holidays are the best time to redeem your credit card’s rewards. If you have a co-branded airline card, such as American Airlines AAdvantage MileUp℠ Card, you can use it to buy the ticket either with American Airlines or transfer the miles to over 20 partner airlines.

If you have a general travel card, like Chase Sapphire Preferred Card, you can redeem your rewards through the company’s travel portal, the Ultimate Rewards portal.

Whatever the case, book early for the best redemption value, and you won’t have any flight debt to weigh you down.

You may also have a hotel credit card. If so, you can pay for your stay with those accumulated rewards. You may even get a free upgrade to a preferred room and credits for food and beverage that you have at the hotel to reduce costs further.

The key is to take advantage of all the rewards you’ve built up now, which will significantly lower your total travel costs.

Pay the bill in full with cash before the due date

Charged your travel expenses for the points? Ramona Ortega, personal finance expert and founder of My Money My Future, says it will be very important to take the next step: delete the balance right away instead of letting it linger.

“Have a plan for how you will pay the holiday trip off before you even make the charge,” says Ortega. “If you must split the cost up over a couple months, do it, but project for the added interest.”

And never spend with the card to get the rewards. The value of the cash, points or miles declines when you carry a balance over to the next month, since interest will be added.

“If you’ve got the cash on hand, transfer that amount to your credit card immediately after paying for travel on your credit card,” says Foster. “That way you get all the points, perks and bonuses that come along with paying by card without ever increasing the balance on your card or needing to pay interest on it.”

Open a new card with a big sign-up bonus

Another strategy for prepaying and slashing the cost of your holiday travel is with a new credit card that offers a large sign-up bonus.

“It’s not uncommon to see offers for 100,000 points (or more!), which is more than enough to pay for two round-trip flights to Europe,” says Foster. “You will need to meet a minimum spend on that card before receiving your points, though, so make sure you sign up for the card well in advance.”

In fact, you may be able to hit that minimum spend with your holiday travel.

For example, the Capital One Venture Rewards card will give you 75,000 miles after you spend $4,000 on purchases within the first three months of opening the account. Your Thanksgiving trip plus a few other holiday-related items may be just enough to meet the spend. As long as you pay in full to avoid interest, those miles — worth about $750 when redeemed through the Capital One Travel portal — are all yours for the next trip.

Bottom line

By researching the lowest price on travel expenses and using your travel credit card to its fullest capabilities, you can charge your holiday trips now and ring in 2023 without expensive consumer debt hanging over your head.

“A little good planning can go a very long way,” says Ortega. “Remember, you control the process!”