I heard that one should always purchase everything travelling related with credit card because it is easier to get refund if vacations gets cancelled for what ever reason. Has anybody heard about this? What precautions should I take if we consider "normal" situation and forget about covid for once?

I have a second credit card that is only used online. You do have a couple of hoops to jump through if you make a claim, but it is easier to raise a stink via a credit card. Do get and save a cancellation policy first.

How else would you pay for those things? Most hotels require a credit card or debit card to make a reservation, anyways.