TRAVEL TIPS
Pros and cons of using a debit v credit card when traveling overseas
Your preferences, financial situation, and how you plan to manage your travel expenses will help you determine whether a credit or debit card is best for you.
Credit Card or Debit Card for Overseas Travel?
Your preferences, financial situation, and how you plan to manage your travel expenses will help you determine whether a credit or debit card is best for you. There are advantages and disadvantages of each.
Debit card
Pros
- might help avoid overspending because the amount of money you can spend is limited to the amount in your checking or savings acount
- no interest charges because you’re spending your own money
- often provide easy access to cash through ATMs which can be helpful for small expenses and tips, as well in places where credit cards are less commons
- generally use interbank exchange rate which can be favorable compared to other currency exchange methods
- widely accepted around the world
Cons
- limited fraud protection may mean it will take longer to recover funds if you experience fraud
- possible fees for currency conversion when used in some banks
- reduced balance for a period of time should a vendor place a hold on funds in your account
- danger of overdrawing your account which will result in overdraft fees
Credit cards
Pros
- usually offer robust fraud protection which can provide greater security when travelling
- may offer travel rewards, cashback, or other benefits (e.g., travel insurance) that can offset trip expenses
- beneficial for covering unexpected expenses, including emergencies
- can help improve your credit score
- often offer competitive currency conversion rates
Cons
- interest fees charged, if you carry a balance
- easier to overspend since you don’t have to pay right away
- some charge foreign transaction fees for purchases made in foreign currencies which negate some of the benefits of use
- generally widely accepted, but not accepted in some places, especially remote ones where cash or debit cards are preferred
How to choose a credit card for international travel
There are many factors to think about when choosing the right credit card for you. Here are some things to consider.
Check for cards with no foreign transaction fees: These fees can add up quickly resulting in unnecessary costs.
Review currency conversion rates: You’ll get greater value when converting your home currency into the local currency with a card that has competitive conversion rates.
Check for Chip-and-PIN capability: This feature might give your card wider acceptance, so see if your card has it. These cards are more commonly accepted in Europe than chip-and-signature cards.
Look for travel rewards and perks: You might be able to offset some travel costs by using a card that offers miles, points, cashback, or additional benefits, such as travel insurance.
Assess ATM access: If it’s important to you to have access to cash where card acceptance is limited, you’ll want to check that the card you choose has fee-free ATM withdrawals abroad.
Review annual fees: Some travel rewards cards have an annual fee. Be sure to weigh the fee against the value of the benefits.
Review cardholder reviews: Check online reviews from travelers who have used the credit card you’re considering.
Consider your spending habits: What is your typical spending pattern when traveling? Choose a card that best suits your spending habits.
Read the fine print: Be sure to read the terms and conditions of the credit card, so you won’t be surprised by restrictions, blackout dates for rewards, or policies related to travel benefits.
Some credit cards are often recommended for international travel. But, the best one for you is based on your specific needs and preferences. So, take the time to research and compare different credit cards. You’ll be better able to choose one that matches your travel goals and help minimize fees.
Before you go
- Notify your card issuer of your travel plans (dates and destinations) to avoid potential security holds or declined transactions.
- Consider taking a backup credit card in case your primary card is lost or stolen, or you have an issue using it.
- Carry some local currency in case you’re in a destination that doesn’t accept credit cards.
- Get an RFID-protective device to protect the security of your card.
