Credit Cards or Debit Cards: What Is the Best Card for Travel Overseas?

Aug 05, 2016 | Be First to Comment!

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The last thing many people think about when planning a trip overseas is how they’ll use the money when they get there. Unfortunately, if you don’t have that part of the equation covered before you leave, you could end up losing a significant amount of money to fees. That’s not exactly how most of us envision spending our travel funds.

So how can you avoid these fees before you go? It all comes down to finding the best way to access and spend your money while you’re away.

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 create 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 3 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 actually 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 types 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 While Traveling

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 downside of a debit card is that, if stolen, the thief suddenly has access to all the money in that particular bank account. If you don’t have a credit card to use as a backup, then that could seriously hamper your entire trip while you wait to get it all sorted out and free up your funds.

  • Can’t overspend - limited by the funds in your bank account
  • Access to cash if you need to withdraw it from an ATM


  • If it’s stolen, you could be left without access to your money

The Pros and Cons of Using a Credit Card While Traveling

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. 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 cash.

  • You’re not limited to the amount of money in your bank account
  • If it’s stolen, the funds in your bank account won’t be compromised


  • It can be easy to unintentionally overspend
  • You won’t have access to the cash in your bank account

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.

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.

Use a Chip-Enabled Card

This is a tip that’s good whether you’re buying at home or traveling abroad: use a chip-enabled credit or debit card.

Chip-enabled cards have gotten a lot more popular in the U.S. since so many retail stores have been dealing with data breaches in the past few years. These cards offer a much stronger protection against fraud than the regular magnetic strip cards. And, since most banks and credit card issuers are rolling them out now, it might not be too hard to ask your issuer for one of these before you go.

While nothing is completely perfect, this is another layer of protection you can add to keep your money safe.

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.

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