When we think about travel credit cards, we tend to think of fancy airport lounges and frequent flyer miles. For some travellers, namely those on budgets like students and backpackers, what you’re looking for in a travel credit card might actually be a little bit different.

As much as we’d all love to travel regularly enough to earn the miles for business class upgrades, or to have enough rewards points to fly to London for free, many of us go the thriftier route when we travel. 

But where do you start? Can you just use your ordinary credit card? Will you be stuck with this credit card forever? What does this mean for your credit score? Never fear! We’ve got all your questions answered (and maybe a few more).

I’m travelling on a budget – why do I need a travel credit card?

Let’s answer the biggest question of all: do I even need a credit card if I’m trying to be a thrifty traveller? The answer is, not necessarily. But depending on your travel plans, you might. 

Since a credit card uses borrowed money, it is very different from a prepaid travel card – which may be a better option if you really want to cut costs. There are many options which allow you to carry multiple currencies on the one prepaid card, and they’re a useful tool in any travel wallet. 

A credit card could come in handy for many occasions, such as:

• Travelling for a long time period
• Travelling with an unknown return date
• Leaving a deposit with a rental company
• Providing travel insurance in certain circumstances
• Emergencies (medical and otherwise)
• Larger expenses (flights, transport, etc)
• Souvenirs

In general, a credit card will allow you a bit more security should anything go wrong, and add greater flexibility to your travel arsenal. For a short trip, they may not be a necessity, but they can definitely lend a helping hand.

Are there any travel credit card traps to watch for?

If you’re travelling on a budget, it’s not all about the benefits – it’s also about making sure you don’t fall into any traps. Here are some things to watch out for with travel credit cards:

• Introductory offers – We love an introductory offer that gives you a reduced rate or a waived fee, but it’s important to watch out for when the offers end. If you’ve picked a card that offers a 0% p.a. interest rate for 6 months before switching over to 19.99% p.a., you don’t want to get stuck paying a higher rate while you’re in the middle of an expensive trip.
• Paper statement fees – These aren’t just a trap for travel credit cards, but also just something to watch for with credit cards! Some cards will send out paper statements by default and charge a small fee for the privilege, even though you will often be able to opt for digital statements only via your online account. Since you won’t be at home, there’s no use paying for those paper statements you aren’t receiving!
• Rewards caps and expiries – If you do opt for a card that gives rewards points, make sure to read up on their points earning rate. Some rewards cards cap the points that you can earn after a certain amount, or switch you to a lower rate of earning, meaning you could potentially be spending money without earning maximum points. Other cards have points which expire, so you can end up paying for rewards you don’t end up using.
• Cash advance rates and ATM fees – Credit cards will charge you a higher rate for any cash that you withdraw, or transfer over into another account. There’s also no interest-free period on cash, so this should be avoided if you want to keep costs low. Add to this the varying costs of international ATMs, and you could end up paying much more than you bargained for.
• Dynamic currency conversion – Have you ever seen the screen on a payment terminal which asks if you’d like to pay in the local currency or in AUD? If you choose to pay in Aussie dollars, you’ll also pay for something called Dynamic Currency Conversion, which can be between 5%-15% on top of any Foreign Exchange Margin already charged by your card.

Which travel credit card is best for me?

Which travel credit card suits you best will come down to your own personal circumstances and knowing your own situation.

For example, say you’re off to Europe on a five month trip. You want to take a credit card because you’ll be flying and catching trains around while you’re there, but also renting cars in more remote areas – or maybe a Vespa down the Amalfi coast? Your budget is pretty tight, because you’ve spent all your money on accommodation and round-the-world flights already. Which card do you go with?

• a) The Low Rate Card. You know you’re not going to have the money to pay off big expenses at the end of each billing cycle, and you don’t want to pay high interest on the balance that is sure to be left over from those unavoidable expenses.
• b) The Low Fee Card. You’ve saved up for this trip really diligently, or will be getting paid while you are away, and are planning on paying your card off in full as you go. This credit card is really for emergencies, and you don’t want to pay a big annual fee for that.
• c) The Rewards card. Sure, you’re on a budget, but you booked all of your flights on this card to maximise your points and now you’ve got lounge access at the airport and fast-tracked check in and you don’t have to buy extra travel insurance (just make sure to read the PDS). Worth it.

And the answer is: whichever of these scenarios sounds most like you! 

So get ready to read the fine print, sort out your worldwide wallet, and hit that tarmac.

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