Credit card

How to pay travel expenses without a credit card

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With pandemic restrictions easing around the world, the wanderlust has set in for many Americans. Although there are several advantages to using a credit card while traveling, the main one being the protection offered by the card, not everyone has one or wants to travel with it.

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It’s true that the payment method remains hugely popular, as a new GOBankingRates survey reveals that 38% of Americans have charged their credit cards for travel expenses – the second most popular use after monthly bills. But, on the other hand, 16% say they don’t have a credit card.

Other reasons for not using a credit card while traveling include a desire to manage expenses more sensibly, a desire to avoid fees, or simply to wait to be approved for a card.

So no credit card? No problem. There are still plenty of options if you fall into this category and are traveling. Let’s take a look at some of them.

Debit card

You can use a debit card when you travel, the same way you use a credit card for plane or hotel reservations, for example. It has multiple advantages, namely that you can only use the funds linked to your bank account, and therefore you cannot overspend.

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However, be aware that hotels or airlines may block the debit card until the date of your trip.

“Debit cards have the advantage of not putting you in debt when used,” said Jason Porter, senior investment manager at Scottish Heritage SG. “They limit your spending to funds in your bank account.”

Porter adds that there will also be no monthly interest charges; However, if you book a hotel room or rent a car using a debit card, the hotel or car rental company may put a hold on your card greater than the amount of the reservation such as accident insurance.

“The card will be declined if you run out of money, unless you enroll in an overdraft protection program, in which case the bank would cover the fee,” Porter said. “If you don’t and you face an unexpected expense, you may not have enough funds in your account to complete a transaction at this time.”

PayPal

Another option for paying your travel expenses is to open a PayPal account; linking your bank accounts, debit cards or credit cards will allow you to book flights, car rentals and hotel reservations. PayPal also has several business partners – Hotwire, Hotels.com, Expedia and Orbitz, as well as many airlines.

Rhett Stubbendeck, CEO of LeverageRx, said he primarily uses PayPal for travel because it’s a secure payment method and you don’t have to enter credit and debit card information with the airline or hotel.

However, he notes that the use of this method of payment may cause some inconvenience.

“PayPal sometimes freezes the user’s account without any warning,” he said. “Any unusual behavior is identified by the company’s algorithms, making it impossible to receive or send money. In addition, PayPal can sometimes block your money.

Gift cards

Gift cards are also a great option as they cover the gamut of the travel world. In addition to airlines, gift cards are used by Airbnb, Hotels.com, Uber, Amtrak, and several cruise lines. Delta gift cards range from $50 to $2,000, while Airbnb gift cards range from $25 to $2,000.

“Gift cards can be obtained in a variety of ways, and often at a discount, so you spend less on travel expenses, making them a great way to save some cash,” says Pamela Howard from Our Adventure is Everywhere. “Some of the downsides are that you have to buy the gift cards in advance and carry them around – and that’s frustrating when there’s only a little money left on them. However, the convenience of not having to worry about owning credit cards and the savings from buying discounted gift cards may outweigh these disadvantages.

Cash

Cash is the easiest way, but it can also be less secure, as you won’t have any recourse if it’s lost or stolen. However, if you want to budget better, this might be the way to go. Another important point is that you obviously cannot pay for your flight tickets online in cash, but some airlines allow you to do this at the airport.

“There’s a psychological effect to using cash,” said Trevor Ford, head of growth for mobile app Yotta. “You instinctively want to stretch those dollars as much as you can. You don’t have the same mindset every time you use plastic.

Buy now, pay later (BNPL)

BNPL is a type of deferred payment option that typically allows the consumer to split a purchase into multiple installments, usually four or less, often with a 25% down payment due at checkout, according to the Consumer Financial Protection Bureau (CFPB). If you are in a hurry or want to split the expenses, this payment method can be a good option.

“Paying over time with an option like Affirm gives consumers the flexibility to allocate costs and transparency to better control their budgets,” said Ashmi Pancholi, vice president of consumer insights at Affirm. “While many are sailing at record travel prices, we have seen firsthand the demand for alternative payment options at Affirm. Last summer we saw 5x more spending on flights while hotel spending have more than doubled.

Pancholi added that Affirm has several travel partners, including American Airlines, Delta Vacations, Vrbo, Vacasa and Priceline.

However, BNPL payments are loans and as such should be used with caution.

“One of the biggest challenges with these plans is paying when due,” said Freddie Huynh, vice president of data optimization at Freedom Debt Relief. “It sounds simple, but it’s one more payment to manage, along with rent or mortgage, utilities and any other debt payments. Not all payments have the same due date, and the compounding is bi-weekly due date for most BNPL plans. And, if you don’t make a payment on time and in full, the interest and fees can be substantial.

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This article originally appeared on GOBankingRates.com: Experts: How to pay travel expenses without a credit card