The dog days of summer are here which means plenty of us are booking trips to get out of town. Whether your travel plans are domestic or international, chances are you’ll be using your credit card for at least some of your travel expenses. While this is concerning for us finance folks with the average card holder in $14,753 of credit card debt (The Federal Reserve Consumer Credit Bulletin April 2011), we know travel is inevitable. Learn what you need to do to avoid hurting your credit score.
Don’t Forget About Payments.
Most people go away and completely forget about the payment due date for their credit card bill which is a big mistake since it accounts for 35% of your credit score. Make sure you pre-pay or auto-pay your bill. As a side note, don’t forget about paying your other bills such as your electric, cable, and cellphone bills since late fees can add up quickly.
Don’t Exceed 30% of Your Credit Limit
It is very important to understand exactly what this means since it accounts for about 30% of your credit score. Your credit utilization ratio is your TOTAL credit balance across all credit cards divided by the total credit limit. This means that if you have a $3,000 credit card balance on an American Express card with a credit limit of $5,000 & a $2,000 balance on a Visa card which has a credit limit of $10,000, then your credit utilization ratio would be $3,000 + $2,000 divided by $5,000 + $10,000 or $5,000/15,000=33.33%. So if you are at this level or slightly below, you should re-think putting your trip on your credit card.
Be Aware of Identity Theft Since it Can Impact Your Credit
Traveling means you’ll likely be sharing your personal information in unfamiliar places. While there is an increased risk for identity theft while traveling, you can take some necessary precautions. Never leave your personal documents in a car or a hotel room unless there in a robust safe. In addition, don’t forget about protecting the data on your computer since a stolen computer can potentially be as damaging as a stolen passport. Lastly, make sure you notify your credit card companies of your travels and put alerts on for any suspicious charges.
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