Is it better to use a credit card or debit card on vacation?

Question

Yes, using a credit card internationally is the best way to go about paying for things when you’re abroad. It’s safer because you don’t have to carry as much cash, and all major credit card companies offer $0 fraud liability guarantees. Using a credit card internationally also gets you the ... read full answer best currency exchange rates, and it’s a great opportunity to earn rewards.

Using a credit card internationally isn’t the same as using a credit card domestically, though. There are a few guidelines to follow, such as using a no foreign transaction fee credit card on the Visa or Mastercard network. And there are several other items you should be aware of, including travel alerts, chips and dynamic currency conversion.

Here are some tips for using a credit card internationally:

Full protection from unauthorized charges: Credit cards allow you to minimize the amount of cash you carry abroad and provide the opportunity to earn rewards. They also come with $0 fraud liability.

Avoid foreign transaction fees: Many credit cards come with foreign transaction fees when you buy from internationally-based merchants. These fees are typically 1%-3% of the purchase amount. If you go abroad, you should get a card with no foreign transaction fee.

Set travel alerts: Many credit card companies ask that you set a “travel alert” before leaving the country. It’s not mandatory. But if you don’t, they might suspect that international purchases are fraud and suspend your spending privileges until you notify them otherwise.

Wider acceptance and more protection with chip cards: You’ll have a smoother experience using a credit card internationally if it’s a “chip” card. Many unmanned payment terminals abroad will not take cards that have only a magnetic stripe. And merchants may even give you a hard time if your card doesn’t have a chip.

Refuse Dynamic Currency Conversion: Choose to pay in the local currency. Merchants may offer to let you pay in U.S. dollars, a practice known as Dynamic Currency Conversion. But it’s often an excuse to use an unfair exchange rate (often as much as 7% higher) and overcharge you.

Avoid cash advances: Credit card cash advances allow you to get cash from your card’s credit line. However, cash advances are subject to hefty fees and interest rates that accrue immediately, with no grace period. So it’s best to avoid them outside of emergency use.

If you’re in the market for a credit card to use internationally, check out our editors' picks for the best credit cards for international travel.

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Answer 1 · 2022-10-06 13:27:33

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Ryan P Page, Staff Writer

@ryan_page • 10/06/22 This answer was first published on 10/06/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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It is better to use a credit card than a debit card on vacation because credit cards are more secure and more likely to help you earn rewards while you’re away from home. Some credit cards also come with valuable travel perks like airport lounge access, free nights at select hotels, or a statement credit for TSA PreCheck. Similarly, if you have the right travel credit card, you’ll benefit from travel insurance that can protect you and your possessions while you are on vacation.

Why It’s Better to Use a Credit Card Than a Debit Card on Vacation

Rewards

Hundreds of credit cards reward you with points, miles or cash back for every $1 you spend. Choosing the right credit card for your credit score and spending habits can save you hundreds of dollars per year, which you can put toward a vacation. However, only a very small percentage of debit cards offer rewards at all, and only a handful can compete with what credit cards give you.

Better Fraud Protection

Credit cards offer better fraud protection than debit cards. Credit card users have a $0 fraud liability guarantee for all transactions, unlike with debit cards, and the money in your bank account isn’t at risk when someone steals your credit card. When traveling to a new and unfamiliar place on vacation, that protection is likely to be very appealing.

Travel Insurance

In addition to $0 fraud liability protection, the right credit card can also protect you and your possessions while you’re on vacation. If your card includes travel insurance, it can cover damaged or lost luggage, trip cancellation, damage to rental cars, and more. Make sure to check with your card’s issuer or review the card’s benefits guide before your trip to see what types of travel insurance your card may have.

More Options for International Travel

If you are heading abroad for your trip, you will want to avoid foreign transaction fees. Although both credit and debit cards are subject to this 2-4% upcharge, getting a credit card without a foreign transaction fee is a bit easier than finding a debit card with no foreign fees.

Best Credit Cards to Use on Vacation in 2023

No Annual Fee: Chase Freedom Unlimited®Chase Freedom Unlimited®Learn MoreLearn Moreon issuer's website
Great Initial Bonus: Chase Sapphire Preferred® CardChase Sapphire Preferred® CardLearn MoreLearn Moreon issuer's website
Best for Fair Credit: Capital One QuicksilverOne Cash Rewards Credit CardCapital One QuicksilverOne Cash Rewards Credit CardLearn MoreLearn More
Great for International Travel: Capital One Venture Rewards Credit CardCapital One Venture Rewards Credit CardLearn MoreLearn More

If you don’t have a credit card for travel, or would prefer a card that helps you stay within a set budget, you can mitigate fraud concerns by getting a prepaid card. Unlike a debit card, prepaid cards are not connected directly to your checking account, which can help keep your finances safe while traveling.

Is it better to use a credit card or debit card on vacation?

Ryan P Page, Staff Writer

Why It’s Better to Use a Credit Card Than a Debit Card on Vacation

Rewards

Better Fraud Protection

Travel Insurance

More Options for International Travel

Best Credit Cards to Use on Vacation in 2023

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