Updated: Mar 12, 2024

Credit Card vs. Debit Card: Which is the Best for Travel Abroad?.

Traveling abroad? Find out the best way to access and spend your money so you can save on fees, earn rewards, and protect your finances while you travel.
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Planning a trip overseas involves several aspects, and one important thing to consider is how you will use money when you get there. Failure to cover this part of the equation before leaving can lead to significant losses through fees, which is not how most travelers envision spending their funds.

To avoid these fees, it's crucial to find the best way to access and spend your money while abroad.

What’s the Best Way to Access and Spend Your Money While You Travel Abroad?

There are lots of ways to access your money while abroad, more than ever, in fact.

You could go credit cards only and leave the cash in your bank account to pay for it all when you return.

Or you could use your debit card to ensure that you don’t accidentally overspend (sometimes that credit card swipe can be a little too easy).

But which way is best?

Besides the fact that only you know what will work best for your habits, there are other considerations at play: making the choices that will charge the least amount of fees and that will potentially even earn you money.

Fees to Worry About While You Travel

When it comes to fees and travel, most people worry about the conversion rates.

And they should!

Depending on where you go, your money could either as much as double in value or go down to half of what it’s worth at home.

To a point, there’s not much you can do about it besides creating a budget that keeps that in mind, so you aren’t blindsided when it’s too late.

But conversion rates aren’t the only thing that can cost you money while you travel.

In fact, the fee that can be the peskiest of all is the foreign transaction fee.

Foreign transaction fees are charges that happen on every transaction you make while you’re traveling in a foreign country.

While these fees may not sound like much at first (usually around 3% at the most), they can add up very quickly - especially if you’re not likely to carry any cash while you travel.

Think about it this way, if you buy breakfast, lunch, and dinner while you’re away, that’s already three foreign transaction fees per day - that doesn’t even count buying train tickets or souvenirs or tickets for cultural events and institutions.

Multiply that minimum of 3 fees times one week-long trip, and suddenly you’re paying up to 3% of 21 transactions.

See how quickly that can get expensive?

The math makes this one simple.

No matter what kind of card you’re using to spend your money while you’re traveling in a foreign country, make sure it’s one that doesn’t charge foreign transaction fees.

How You Can Earn Money While You Travel

Now that you know how to avoid fees when you travel let’s talk about how you can earn money while you travel.

Depending on the type of card you’re using (or what kind you get if you’re shopping for a new card), you could earn rewards for all kinds of different spending.

If you’re planning on using a card to make your purchases while you travel abroad anyway, why not earn some points, cash, or rewards for doing so?

If your current debit or credit card doesn’t offer rewards - or if you don’t usually focus on rewards because you spend with cash - consider the benefits of looking into a rewards card for your trip.

Chances are you won’t be using cash - so why not get paid for using your card?

If it’s a credit card, just make sure you pay the balance in full before the interest hits, so you don’t wind up losing more than you earn.

So What’s Best for Travel? Credit or Debit Cards?

Now that we’ve covered the fees to look out for and the ways to earn, let’s get into the real question: whether you should use a debit card or credit card while you travel.

The Pro and Cons of Using a Debit Card

If you’re using a debit card, you’re basically using cash. Whether you enter a pin at the time of purchase or select the “credit” option, that money is coming right out of your account within a few days time.

For someone who doesn’t want to run the risk of spending more than planned, this can be a good option.

After all, as easy as it is to swipe a card, there is still a finite money in your bank account to contend with.

The other benefit of using a debit card is that it also functions as an ATM card.

So if you need cash on hand, you can get it with your debit card. Just beware hefty ATM and exchange fees.

The biggest downfall of paying with debit versus a credit card is the fact that if a debit card is hacked, the funds from your bank account are at risk.

If you don’t have a credit card to use as a backup, then that could severely hamper your entire trip while you wait to get it all sorted out and free up your funds.

When someone makes charges on your account, the money you need for bills and living expenses are immediately taken away, giving you less to manage, overall.

You could face serious financial consequences if your bank account information is leaked and someone manages to use all of the funds.

Pending transactions or checks may bounce, and that could result in hurting your credit score.

It is possible to fix errors that were not your fault, but when a debit card is stolen it could cause you a bigger headache.

The Pros and Cons of Using a Credit Card

Unlike a debit card, there are far fewer limits to what you can spend.

As long as your credit limit is decently high, you have a lot of funds to work with.

The problem is, that makes it a little too easy sometimes to spend more than you can afford.

The benefit of using a credit card while you travel is a double-edged sword.

You can spend roughly as much as you’d like, but you don’t want to spend so much that it will take years to pay off.

One of the best things about using a credit card for foreign travel is that, if it’s stolen, you don’t have to worry about losing access to your real money.

However, you’ll still need to have a backup card (whether it’s debit or credit) if that happens.

Your issuer may still suspend your account while the situation gets resolved.

The con of using a credit card for travel is you won’t be able to use it at ATMs to access the cash in your bank account.

So if you find yourself at a cash-only establishment, you’re going to get stuck if you don’t also have cash or a debit card to withdraw some money.

The Best Approach Is a Combination of the Two

Since both options have a fair list of pros and cons, the real winner here is to use a combined approach.

Rather than asking if you should use a credit card or a debit card while you travel abroad, bring both.

Bringing both a credit and debit card helps prepare you for all the situations listed above - and when you’re far from home, being prepared can be a real game changer.

But when it comes down to which one you should use primarily, consider your spending habits.

If you’re afraid of overspending, stick to the debit card.

If you’re afraid of fraud, use a credit card. (The credit card won’t prevent fraud, but it does prevent your bank account from being accessed in case of fraud.)

No matter what you do, choose the option that works best for you in the end.

Federal Laws Regarding Debit and Credit Cards

What many people do not realize is that consumer protection laws have different guidelines regarding debit and credit card fraudulent activity.

Under the federal credit billing act, if a credit card number is stolen and used, the card owner is not held liable for any charges.

When a credit card is actually stolen, the card owner is not held liable for any charges as long as it is reported missing before transactions take place; otherwise, a maximum of $50 for fraudulent activity could be charged on the card.

Debit cards are a completely different story and give people more to lose if lost or stolen.

If a debit card is lost or stolen and reported before it is used, the card owner is not liable for any of the charges.

However, he/she may be held liable for $50 of fraudulent activity if it is reported within two business days after unauthorized use.

Reporting a stolen card is crucial to avoid paying penalties.

A cardholder could be responsible for up to $500 of fraudulent charges if he/she fails to report a lost or stolen debit card after two days of unauthorized use.

In addition, there is no real limit to the amount a person can lose if a debit card is not reported lost or stolen after the first 60 days of unauthorized usage.

Don’t Forget to Protect Your Money While You Travel

Nothing can ruin a trip faster than not being able to access your money.

That’s why it’s imperative to have some protections in place before you leave.

Here are the two most important things you can do to protect your money before you embark on foreign travel.

Tell Your Card Issuer You’re Going to Travel Abroad

First of all, call your credit card issuer before you go and alert them of your plans.

If you don’t, you might find that the first transactions you make abroad get declined immediately.

Usually, a card issuer would worry that this type of activity is fraudulent - it’s up to you to warn them, so they know it's you making the foreign purchases.

In order to do this, simply look up the customer service number on the back of your card or on your card issuer’s website.

Let them know where you’re going and for how long.

They can make a note of it on your account, so you won’t get declined after you go away.

Keep Your Personal Items on You

Finally, a protected debit or credit card is one that you know where it is.

When you’re embarking on adventures, buy a pack to strap them to your body under your clothes.

When you’re in busy markets, avoid putting them in open purses or your back pocket.

When you’re sitting down, keep your bags near your feet instead of behind or even next to your chair.

It’s not hard for a practiced thief to swipe a wallet or purse.

Keep your personal items on you and you’ll be less likely to endure theft.

Again, a rule that works both abroad and at home.