Credit and Debit Card Tips for Travel

When traveling, whether within the US or internationally, cash might not always be the best option. Carrying a lot of cash is risky. If you lose your wallet or it gets stolen, it's unlikely you'll get your money back.

Using debit or credit cards can be a safer and more cost-effective way to pay worldwide. However, it requires some planning to avoid fees. Whether you opt for a debit or credit card, planning ahead can help you avoid unnecessary expenses.

Credit and Debit Card Fraud Protection While Traveling

When you travel, credit cards provide benefits like protection from unauthorized charges. Federal law limits your liability to $50. Many credit card issuers provide zero-liability protection as well.

This protection also applies to payments made through digital wallets, online transactions, and physical terminals. If you link your credit or debit card to your phone, you gain an additional secure and convenient payment method. To enhance your security, setting up alerts can help you monitor your accounts. Text or email notifications can alert you to any activity as soon as a purchase is made, keeping you connected to your accounts 24/7.

Traveling with a credit card

Before traveling, check if your card issuer requires a travel notification—some do, while others do not. To set a travel alert, call the toll-free number on the back of your card or log in to the issuer's website to inform them of your travel plans. This helps reduce the likelihood of your transactions being flagged as unusual and possibly declined.

While fraud protection is crucial, using credit cards while traveling also offers additional perks. When you book travel with your credit card, you might gain access to benefits that can enhance your trip. Coverage and benefits vary by card, so it's worth researching what your card offers if you have the time:

• Emergency card replacement and emergency cash disbursement

• Travel insurance

• Travel accident insurance

• Lost luggage reimbursement

• Roadside assistance

• Travel and emergency assistance services

• Car rental insurance

Some credit cards offer access to airport lounges for air travel, but they often have an annual fee.

Using Credit Cards Internationally

When traveling internationally, using credit cards can help you save money on currency conversion. Credit card purchases typically benefit from better exchange rates than those offered by currency exchange vendors or banks.

This is because major networks like Visa® and Mastercard® provide rates close to the best available. These networks facilitate global payments between businesses, banks, and consumers. While Discover® and American Express® are also options, Visa and Mastercard are more widely accepted.

Be cautious of Dynamic Currency Conversion (DCC), a potentially more expensive way to make purchases abroad. DCC allows merchants or banks to process a transaction in your home currency for an additional fee. Although it’s marketed as a convenience—letting you see the exact amount you’re paying at the time of the transaction—many experts consider it a way for banks and merchants to impose extra charges on customers.

Additionally, watch out for other fees. A network fee might be charged depending on your credit card’s policies and features. This fee is typically included in the foreign transaction fee charged by your card, which can be up to 3% of each purchase. These costs can add up quickly.

To avoid these fees, consider shopping around for a credit card with no foreign transaction fees and additional benefits such as cash-back rewards.

Traveling with a Debit Card

While credit cards provide more fraud protection and are ideal for most travel spending, there are times when you will need cash. This is where debit cards become essential.

However, be mindful of the fees associated with withdrawing cash. ATM fee reimbursement can be a valuable and cost-saving feature. If your financial institution doesn’t offer this, consider looking for one that does before your trip. In 2023, the average ATM fee was nearly $5.

Using Debit Cards Internationally

Withdrawing money from an ATM in a foreign country usually results in fees from both the local bank that owns the ATM and your home bank. Therefore, researching the fee structure in advance is beneficial. Some debit card providers do not charge fees for using foreign ATMs, and a few may even reimburse fees charged by the foreign bank. Planning your withdrawals ahead of time can help minimize any potential fees.

Bottom Line

Debit and credit cards offer secure and convenient alternatives, provided you plan ahead to avoid unnecessary fees. Credit cards protect against fraud and offer travel benefits. Debit cards are necessary for withdrawing cash, especially with fee reimbursements. Learn about different payment methods, avoid fees, and protect your accounts to have a better travel experience.

Sources:
https://www.fidelity.com/viewpoints/financial-basics/credit-and-debit-card-tips-for-travel

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.