In the spring, snow melts and flowers bloom and many people take time off for a little vacation. Regardless of whether your preferred vacation spot is just around the corner or on the other side of the globe, you might be surprised to discover that your sunscreen can keep you from buying a car this year. And your hotel room rental might keep you from buying a house next year. And the gate admission to your favorite amusement park might lead to a lost job.
I know it sounds outrageous because these vacation items are more or less harmless. But if your good financial behavior takes a hike while you’re on vacation, these seemingly harmless things can lead you into trouble with your credit.
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Even people who remain relatively vigilant with their credit could be tempted to let their guard down while on vacation, making several mistakes that can haunt them for years to come. Here are some common vacation-related credit mistakes:
Mistake #1: Sloppy identity theft precautions
While you enjoy laying on the beach or checking out the local sites of your favorite resort, do you know where your identification is? What about your credit cards? Don’t just be cautious about theft; be cautious about identity theft.
A passport or credit card that is carelessly left out in the open in a hotel room or on a table near the pool contains enough information for an identity thief to spend YOUR money without you realizing it. Most people are cautious about cash but they don’t take the same care with other items that can have an even longer-lasting impact on credit scores.
The best practice is to hide your identification and credit cards as diligently as you hide your cash, and make sure you have contact information of the appropriate organizations (like embassies and credit card companies) if these invaluable items go missing.
Mistake #2: Overspending
Vacations are usually when we splurge and enjoy a little extravagance. Some extra shopping, within reason, is OK as long as you can pay it back on time. However, once you factor in the souvenirs, the hotel minibar tab, a little gambling, some generous tips, and a night out on the town in a great new outfit, that once-thrifty vacation looks very different on a credit card statement.
The best practice is to set a budget and stick to it. If you’re worried, bring a prepaid credit card and leave your regular credit card at home.
Mistake #3: Being unprepared for emergencies
We go on vacations because they get us away from the hustle and bustle of everyday life. But sometimes those stresses and emergencies catch up with us. From medical emergencies to lost luggage to car repairs, vacations can come with high price tags during emergencies. For this reason, you should spend some “glass is half empty” time predicting what could go wrong before your vacation and doing something to help you prepare. Spending a little on travel insurance, for example, can provide peace of mind and help protect your credit if you are injured during your vacation.
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The best practice is to assume the worst and be ready for it — often with some insurance and pre-planning — and you’ll “invest” in a happier, healthier, more carefree vacation… that won’t haunt your credit report for years to come.
Vacations should be restful, enjoyable experiences that erase the stresses of everyday life and build positive memories. Avoiding these three huge credit mistakes when you travel can ensure that it stays that way. If you want to make sure your credit hasn’t gone south, you can monitor your credit score for free using Credit.com’s Credit Report Card.