During 2015, 3 out of every 4 trips (73%) that the Spaniards made were paid with cards, according to the Brain Trust Tourist Barometer, specifically 42% of these payments were made by credit card. This method of payment is a favorite since it allows the possibility of dividing expenses between several months and not having to pay everything in one time. However, it is important to calculate the costs of deferring expenses so as not to end up paying too much.
The term, your ally to not overpay
If you decide to defer summer payments by several monthly installments, you must calculate how much you will pay in interest. The key to saving by splitting expenses is to choose a higher monthly fee and shorten the repayment term as much as possible, always within our economic possibilities. Thus the interest generated will be lower.
For example, if we make a purchase of $ 1,000 with our card, with an average interest of 25%, and decide to post it in 3 monthly installments, $ 42 in interest would be generated. If for the same expense we decide to defer the payment in 5 months, the interest generated would be $ 63 and when reimbursed in 10 months would amount to $ 118.
Choosing a short term will not only help you pay as little as possible in interest, but it will also serve as a way of not over-spending. and not over-borrowing.
The 3 keys to saving with cards abroad
In addition to knowing how to divide the expenses you make, there are also some factors that will help us make the most of our credit cards:
1. Use discounts and promotions: returns of up to 5% on all purchases, redeemable points for gifts, discounts at gas stations, … The possibilities are almost endless. Depending on your behavior as a consumer you must choose a card or another to get the most out of it. For example, if you plan to make a trip by car, looking for plastics with discounts at gas stations will help you save. Do not be afraid to request a new card at another entity if you can get a promotion that benefits you.
2. Be aware of commissions outside of Spain: Using credit cards outside the national network is not always cheap. The commission for the disposition of cash on credit, that of the bank of the country where we are, for currency exchange or for purchases outside the Euro Zone are some of the most common costs when using the cards. In these cases it is better to use a debit card that does not have any of these commissions and that, in addition, will allow you to have greater control over the expense.
3. Don’t forget about insurance: virtually all credit cards include free insurance included. The most common are travel coverage that usually covers flight cancellations, lost luggage or accidents outside of Spain. Knowing the coverage we have and having the insurer’s contact information at hand can save us a few headaches.
Although the cards allow you to get extra capital to enjoy your vacation, it is advisable to always make a detailed budget and keep expenses in check to avoid discomfort when you return.