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Debit vs. Credit Card: Which Is Better for Booking a Hotel?

Author: Andrew Taylor

Credit cards are always going to have an overall negative stigma attached to them. With so many people struggling with debt every day, most will just stay away from credit cards altogether. Unfortunately, that is not always the best idea.

There are a few instances when you should always use a credit card to make your purchases. One of those times just happens to be when you book a hotel. The next time you go to book a hotel room make sure you consider these reasons why it's important to use a credit card and not a debit card.

The Rewards

If you have a cash-back or travel-rewards credit card then you are rewarded for every purchase that you make. With cash-back cards you will receive a percentage of each purchase back, and with travel-reward cards you will earn hotel points or airline miles. (For related reading, see: Find the Top Cash Back Credit Cards.)

There was a time when banks offered reward earning debit cards. Those days are long gone and now it requires a credit card to earn any type of meaningful rewards. There are a few reward earning cards that are great choices for anyone.

Top Choices

  • Chase Sapphire Preferred – The Chase Sapphire Preferred Card is one of the best overall credit cards available today. One of the reasons it's so popular is because it offers two Chase Ultimate Reward points per $1 spent on travel expenses. You will need to book your room directly with the hotel and not through an online travel agency.
  • The Hyatt Credit Card – If you frequently stay at Hyatt Hotels then The Hyatt Credit Card is a great option. First, you will earn a bonus of two free nights anywhere in the world after you sign up and spend $1,000 in the first three months. You will also earn three Hyatt points for each $1 you spend at Hyatt properties.
Foreign Transaction Fees

There is nothing worse than being charged a fee just to have the right to make a purchase. If you are planning a trip outside the United States and need to book a hotel then you might want to think twice about using your debit card in order to avoid fees. Most banks will charge a foreign transaction fee when you use your card outside of the U.S. This fee typically ranges from 1% – 3% of the total purchase price. If you are booking a week-long hotel stay then this could be a pretty large amount. (For more, see: How Foreign Transaction Fees Work.)

Instead of using a debit card make sure you use one of the many credit cards that don't have a foreign transaction fee. A couple of the best options include:

  • British Airways Visa Signature Card – If you book your next hotel stay with The British Airways Visa Signature card then you don't need to worry about foreign transaction fees. If you aren't currently a cardholder and need to sign up, they offer a bonus of 50,000 British Airways Avios after you spend $2,000 in the first three months.
  • Barclaycard Arrival Plus World Elite Mastercard – Another option for avoiding foreign transaction fees would be the Barclaycard Arrival Plus World Elite Mastercard. You will receive 40,000 bonus miles once you spend $3,000 in the first 90 days.
Trip Cancelation or Interruption Insurance

When planning vacations no one ever expects things to not go as they had planned. Unfortunately, things sometimes aren't as easy, especially when weather causes delays and in some cases cancelations. (For more, see: The Basics of Travel Insurance.)

If you paid for your trip using a debit card then you have no protection against non-refundable expenses if your trip is delayed. Instead you could use a credit card that includes trip interruption/cancelation insurance. If your trip is delayed for a number of covered reasons and your hotel is non-refundable then you will receive a reimbursement check up to a certain value.

Here are a couple of credit cards with the best trip cancelation/interruption insurance:

  • United MileagePlus Explorer Card – One of the many card options that include trip cancelation insurance is the Chase United MileagePlus Explorer card. If you book a non-refundable hotel with this card and your trip is canceled then you can be reimbursed up to $10,000.
  • Marriott Rewards Premier Visa Signature – If your trip is canceled or interrupted and you prepaid any non-refundable hotel expenses using a Chase Marriott Rewards Premier Visa Signature card then you could be reimbursed up to $5,000.
Extra Loyalty Points

If you book a hotel using one of the hotels co-branded credit cards then you will earn additional hotel loyalty points. Instead of earning the base rate of one or maybe two points, you can earn a lot more. For example, anyone that uses the Hyatt card mentioned earlier will earn three points for every $1 spent on purchases at Hyatt including food and shopping. All other purchases with the card earns just one point.

A couple of the best credit cards that earn consumers additional points for hotel stays include:

  • IHG Rewards Club Select Credit Card – When you use an IHG Rewards Club Select card and make any purchase at an IHG property then you will receive five points for every $1 spent.
  • Starwood Preferred Guest credit card from American Express – Cardholders will earn one point for all purchases, but when you book a hotel at any of the 1,200 Starwood locations you can earn up to five points for every $1 spent.
The Bottom Line

There are a lot of advantages to using a credit card to make your everyday purchases, and even more advantages when you are planning to book a hotel room. Not only will you earn rewards, but you can also protect your purchase in case your trip happens to be delayed or canceled.

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