What using a credit card for holiday travel can mean for your trip

A family of four planning a winter getaway to Montana could face about $2,780 before daily spending even begins, based on a Motley Fool Money estimate that puts airfare, hotel, and rental car costs at roughly $695 per traveler.

Charging that trip to a credit card can come with advantages. Travelers may earn rewards, qualify for a welcome bonus worth $300 or more, and in some cases get trip insurance if plans unravel.

Motley Fool Money explains what to consider before using a card for an upcoming holiday trip.

AAA projected that nearly 118 million Americans would drive or fly for the year-end holidays, giving many travelers a chance to maximize rewards, take advantage of perks, and recoup some of the cost of an expensive trip.

If you’re flying, a strong travel rewards card is typically the best option for earning more on airfare and hotels. If you’re driving, gas and grocery cards can offer better returns on fuel and road-trip purchases.

For families crossing several states by plane, airfare is only part of the bill. Based on Motley Fool Money’s review of travel industry data, here is a rough look at how that Montana trip adds up with a hotel and rental car included.

Travelers with relatives within driving distance can save considerably. A 1,000-mile trip by car costs about $155 in gas, using AAA’s national average and a vehicle that gets 28 mpg. In that situation, a gas card can be especially useful.

Americans earned about $47 billion in credit card rewards in 2024, according to Motley Fool Money’s compilation of CFPB-based rewards data.

Some travelers avoid hotel costs altogether by staying with in-laws. That can trim about $642 from a trip, though it does nothing to prevent an early-morning kitchen standoff with a quiet father-in-law over coffee.

Saved points can offset part of a holiday flight

The rewards already sitting in your account could reduce your travel bill more than you think.

The CFPB reported that the average credit card rewards balance was $192 at the end of 2024. That is less than half of a $402 Thanksgiving fare, but it is still money you do not need to cover out of pocket.

Letting rewards sit unused can be a bigger problem. About 2.8% of credit card accounts forfeit at least some rewards in the fourth quarter, according to the CFPB, and of the $47 billion in rewards Americans earned in 2024, about $6.6 billion were miles. It is worth logging in to check your balance before booking, especially if a card has been collecting dust.

For example, a traveler who finds $150 in forgotten points right before booking could use them for the family’s checked bags or most of a day’s rental-car cost. Redeeming points carefully can make them go further.

If airfare is high, a new card bonus may help

A travel card’s welcome offer can pay for much of one holiday flight on its own.

According to the CFPB, the average welcome offer was worth $311 in 2024. That is roughly 69% to 77% of one traveler’s holiday airfare.

There is a catch, though. Most card issuers require cardholders to spend a certain amount within a few months of opening the account, such as $1,000 in the first 90 days.

If you are already booking a holiday trip, that spending can help quickly, since one round of family airfare may cover much of the requirement.

A trip over $1,500 should come with a payoff plan

If you pay the statement balance in full by the due date, you will not owe interest. If you do not, the value of your rewards can shrink fast.

For instance, a $1,500 travel charge at 22% APR paid down at $100 a month would take about 18 months to eliminate and cost roughly $270 in interest.

If paying in full is not realistic, a 0% intro APR card can spread the cost over time without interest. The key is to divide the balance across the promotional period so it is paid off before the standard rate begins. With a 12-month promo window, that same $1,500 trip works out to $125 a month.

Big purchases and new cards can affect your credit score

According to FICO, payment history accounts for 35% of a FICO® Score, amounts owed for 30%, and new credit for 10%. Putting a large vacation on a new card can influence all of those factors.

The amounts owed category is where a large charge can hurt most. If a $2,782 Montana trip lands on a card with a $5,000 limit, that is 56% of the available credit. Scoring models may view that kind of utilization as a sign of stress, even if the balance is paid off a few weeks later.

Timing helps. Card issuers usually report balances when the statement closes, so paying before that point can keep the reported balance lower. Opening a new card also counts as new credit and can cause a small, temporary dip.

For most people, that short-term dip is not a major issue. But if you are preparing to apply for a mortgage or auto loan, it may be wise to wait on new credit cards until after that process is finished.

The best holiday trips leave you with memories, not debt

The holidays can be costly and stressful, so your credit card should help ease the burden rather than add to it.

Choose a rewards card that fits your travel style, use the points you already have, and make sure you have a plan to pay the balance before the next bill arrives.

For the family heading to Montana, the right card and a solid repayment plan can mean coming home with rewards intact, photos of snowy adventures, and perhaps one more quiet cup of coffee with the father-in-law.

FAQs

Does my credit card have travel insurance?

Some credit cards include travel insurance, but many do not. When coverage is included, you usually have to pay for the trip with that card. Check your card’s benefits guide for trip cancellation, delay, and lost baggage protection before booking.

Is it better to pay for flights with a credit card or debit card?

A credit card is usually the better choice for airfare. Federal law gives credit cards stronger fraud and dispute protections, and the charge does not immediately reduce the money in your checking account. Many cards also offer higher rewards on flights.

Can I use my credit card points to book a flight for someone else?

Yes. Most rewards programs let you use points to book flights for family members or friends. Some programs limit transfers to authorized users or people in your household, so check the rules before booking a large family trip.