The hospitality industry has started using à la carte pricing more often to earn more money. They now charge for things like checked bags and amenities, which can be expensive for travelers who don’t want a very basic experience.
Banks are now charging fees to travelers who use their credit and debit cards while abroad. This includes a 3 percent charge for credit card purchases and expensive fees for withdrawing cash. Regardless of whether you pay for your travel using points or cash, the total cost of your trip is more complicated than it seems.
Fortunately, you can avoid these extra fees by using the right credit cards when traveling. This will help you save money on travel expenses and allow you to have more spending money for your trip. I’ll share five common travel fees that can be avoided with the right travel credit card assortment.
If you travel often or even just once a year, paying $30 for checked bags each time can become expensive. Fortunately, many credit cards fully waive this fee. The majority of airline credit cards allow the main cardholder and at least one other person on the same travel plan to have one free checked bag. If a couple travels together on a round-trip flight, they can save over $120. This benefit can justify the annual fee of most airline credit cards, which can be as low as $95.
If you don’t always stick with one airline, you can still avoid baggage fees by using the Capital One Venture Rewards Credit Card. This credit card lets you use your miles to pay for travel expenses, including baggage fees. All you need to do is charge the fee to your Venture Rewards card and use 3,500 miles to cover a $35 baggage fee.
Many credit cards provide an annual travel credit from $100 to $300; some offer an airline fee credit as well. However, certain issuers like American Express require you to select one of nine airlines each year, which can be a drawback for those who don’t have loyalty to any specific airline and may not use the credit completely. However, many people obtain these cards for various travel benefits, and the credit for airline fees prevents them from needing to acquire a co-branded card specifically for baggage fees.
Hotels are adopting the airline strategy of generating revenue through fees. They typically charge resort fees but have labeled them as “urban” or “destination” fees, even when they don’t have amenities like pools or spas. Unfortunately, these fees can significantly reduce your travel budget as you may pay an extra $35 per night on top of your room rate.
Using certain hotel credit cards can make resort fees less of a burden on your vacation. These cards offer either a statement credit to cover the cost of the resort fees or elite status that exempts you from paying them. One example is the World of Hyatt program, which does not charge resort fees for Globalist members at the highest tier. The World of Hyatt Credit Card offers a way to quickly increase your status with five qualifying night credits each year. Additionally, you can earn two more qualifying nights for every $5,000 spent using the card.
Award taxes and fees
While earning credit card points can help you travel at a discounted rate or even for free, keep in mind that award travel still comes with taxes and fees imposed by airlines. The minimum tax is $5.60, but the amount can exceed $1,000 based on your destination. If you plan to travel with a companion or family, the taxes and fees can add up significantly, so be mindful of these costs.
If you don’t have an airline credit card and prefer not to pay high annual fees for credit cards that offer flexible credits, then you can use the Capital One Venture Rewards card to offset award taxes and fees. This card allows you to redeem miles for all travel purchases, including award taxes and fees, although it does not provide a statement credit like airline fee credits.
Foreign transaction fees
For some people, it can be difficult to stay within a travel budget, especially with additional expenses. If you own a card such as Chase Freedom Unlimited®, it’s important to note that using it outside the country will result in a foreign transaction fee of 3 percent, which you may not realize. To avoid the annoying fees, you can use a credit card that doesn’t charge for foreign transactions. There are several options, such as the well-known Chase Sapphire Preferred® Card. If you make purchases of $3,170 or more with your credit card while overseas, you can make up for the card’s $95 yearly fee.
If you prefer a credit card with no annual fees, there are some excellent options that don’t charge foreign transaction fees. These options include the Capital One VentureOne Rewards Credit Card, Discover it® Cash Back, and Capital One Quicksilver Cash Rewards Credit Card. All of these cards have a great rewards program and a simple redemption process, and they won’t charge you extra fees for purchases made abroad.
It can be difficult to locate an ATM linked to your bank when you require immediate cash in a new city or country. Out-of-network ATM fees can be quite exorbitant, ranging up to $5.60 per transaction. Nobody wants to pay charges for withdrawing their own money. Fortunately, the Charles Schwab debit card and the SoFi Money debit card do not charge any ATM fees.
If you’re looking for an account that doesn’t charge ATM fees, Charles Schwab is a better option than SoFi. While SoFi only waives fees for over 55,000 Allpoint ATMs worldwide, Charles Schwab waives fees both in the US and abroad, no matter what network the ATM belongs to. To take advantage of this, just open a Schwab Bank High Yield Investor Savings® Account, and you’ll receive a debit card that you can use to withdraw cash from ATMs without incurring any fees.
Opening an account with no monthly fees can be a smart move if you have a future international trip planned.
The bottom line
When traveling, fees can accumulate quickly. However, you can avoid unnecessary fees with some planning and by using the appropriate cards, saving you a significant amount of money and making your travels more enjoyable financially.