Hi
The charge for paying by card is just to cover the merchants fee applied to the company you book your holiday with. Sometimes with a big purchase like a holiday people have no option but to pay by card, although so long as your travel agent is registered with ABTA, should they go out of business, you will still be covered. In terms of travel insurance, this is a separate policy which if you need to cancel for reasons beyond your control you could be eligible to make a claim on.
My advice here would be to ensure you book through a reputable agent and take a good level of travel insurance cover and then if you can pay cash and save the 2% fee without any additional worry.
Peter