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Credit cards are great tools for everything from stretching your spending power and managing your monthly purchases to earning rewards that you can put toward travel or cash back. Using a credit card when you travel can also save you time, money and hassle thanks to perks like favorable exchange rates, fraud protection and ease of use. It's not necessary to have a credit card when you travel, but carrying one—or several—can be a good idea for a number of reasons.
Benefits of Traveling With a Credit Card
Just like carrying a card at home has its benefits, there are several reasons you may be happier carrying one while traveling.
- Safety: Carrying and using a credit card is a lot easier and safer than using cash, whether you are venturing abroad or traveling domestically. If your cash is lost or stolen, you can't do much beyond reporting it to the authorities. On the other hand, if your credit card is lost or stolen, you can quickly put a hold on your account and get a new card without having to worry about being held responsible for fraudulent charges. As a side note, this is also why it is often smarter to use a credit card than a debit card since credit card issuers can freeze certain charges. If someone uses your debit card to make a purchase, those funds come right from your bank account and you might have a much harder time getting your money back.
- Ease of use: While you might not have much trouble using cash while traveling domestically, you could have a harder time trying to use cash while making purchases abroad. Generally, you will have to exchange your cash for the local currency—potentially at an unfavorable rate and with fees attached. By contrast, many major credit cards are accepted very widely around the globe, so you don't have to worry about ducking into banks every now and then to exchange paper money.
- Better exchange rate: Speaking of exchanges, part of what makes credit cards beneficial to use when traveling internationally is that many offer better rates of exchange on purchases made in other currencies than you would get if you simply changed your cash at a bank or bureau. This is not always the case, but it's generally true if you are using a card in one of the major networks, such as Visa or Mastercard. Not only that, but some credit cards waive foreign transaction fees. These pesky surcharges usually run between 1% to 3% of your purchase total, which can add up to quite a bit of money depending on how much you are spending. Many of the best rewards credit cards, such as the Chase Sapphire Preferred® Card and Capital One® Venture® Rewards Credit Card don't charge these fees, making them excellent choices for international trips in particular.
- Purchase and trip protections: Among their lesser-known benefits, some credit cards extend both purchase protections and certain types of travel insurance when you use them to book your trip. For example, the Chase Sapphire Preferred® Card covers eligible new purchases made with your card for 120 days against damage or theft up to $500 per claim and $50,000 per account. So if you buy a great souvenir that is then damaged or stolen and is eligible for a claim, you may be able to get your money back. The card also offers a variety of travel protections, including insurance for when your baggage is delayed by over six hours of up to $100 per day for five days to buy replacement essential items like toiletries or clothing; and trip interruption and cancellation coverage of up to $10,000 per person and $20,000 per trip for prepaid, non-refundable travel expenses if your trip is cancelled or cut short due to covered situations. If you just used cash to pay for a trip, you wouldn't be able to take advantage of these potentially money-saving perks.
Drawbacks of Using a Credit Card When Traveling
There aren't many downsides to using a credit card when traveling, but there are a few things to be aware of.
- Carrying identification: Handing over cash for a purchase is straightforward enough in most settings. But if you want to use your credit card when traveling internationally, you might also have to bring your passport along as a form of identification, which can be inconvenient.
- Needing a chip and/or PIN card: Credit cards with chips are becoming more widespread in the U.S., though many still have only an old-fashioned magnetic strip. In some other countries—especially in Europe—many credit card machines only work with chip cards and some of those also require a PIN to complete a transaction. All that might make using cash a lot easier. Before traveling to another country, read up on the credit card requirements and make sure you have one that will be usable.
- Limited acceptance: Although more credit cards are accepted in more places than ever before, every so often you might run up against an issue. A store where you want to buy something does not take Mastercard, for instance, or a restaurant does not accept American Express. If you are traveling somewhere remote, a merchant might also have issues connecting their credit card machine to the internet, which can slow you up or prevent you from making a purchase altogether. Chances are, though, anywhere you go will accept cold, hard cash.
- Foreign transaction fees: As mentioned above, some credit cards charge you a transaction fee for purchases you make when traveling abroad. Double-check your cards and make sure you carry at least one that waives such fees if you intend to take an international trip.
What Types of Payment Should You Bring When Traveling?
While credit cards might be the best overall payment option when traveling, in reality, it's a good idea to carry a few different types of payment with you so that you have options. The ideal combination is to carry a main credit card that waives foreign transaction fees and offers solid purchase and travel protections for you to use the most during your trip. Also bring a backup card in a different network in case you run into any acceptance issues. For instance, if your main card is a Visa like the Chase Sapphire Reserve®, perhaps think about bringing a Mastercard like the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®. Just to be safe, you should always have some amount of cash on hand, whether in U.S. dollars or your destination's currency. Stock up on some before you leave home. Finally, bring your debit card along in case you need to pull more cash out of an ATM for last-minute needs.
It's also a smart idea to keep your backup credit card and your debit card in a separate place from your main credit card. That way, if your primary card is lost or stolen, you will still have other ways to pay for what you need. If you are staying at a hotel, consider leaving your extra cards in the room safe while you are out and about.
Make Sure to Set a Travel Notice
Even if you travel frequently, it is advisable to notify your credit card company that you plan to take a trip, especially if you will be going abroad. That reduces the likelihood your account will be flagged for potential fraud when you use it to make purchases. Setting a travel notice is usually pretty simple. Many credit card companies let you do so by logging in to your account online or via their app and following a few simple steps including listing your destinations and dates of travel. With Chase, for example, you can set a travel notification up to a year in advance that lasts 90 days.
Things to Consider Before Choosing a Travel Card
There are a few final factors to keep in mind when choosing a credit card to take with you when traveling.
Your credit score: If you are applying for a new card, make sure your credit score falls within the typical range of accepted applications. Many premium rewards cards require you to have a score in the good-to-excellent range. If you need to improve your score before applying for the card you want, using Experian Boost™† may help you accomplish that.
Acceptance: Before opening a new card or sticking it in your wallet as you depart on your trip, do some research and make sure you will be able to use it where you are traveling. For instance, if you find out that most merchants where you'll be traveling only accept cards with chips, make sure one of yours has a chip. Or if you read that American Express is not as widely accepted where you are going, be sure to bring a Visa or Mastercard along too.
Foreign transaction fees: It cannot be said enough—if you plan to travel abroad and use a credit card in another country, be sure it is one that waives foreign transaction fees so you are not charged extra on your purchases. Foreign transaction fees will otherwise be charged to every purchase you make while outside the U.S., which can really add up.
Protections: If you plan to use your credit card to pay for your travel or other major purchases, make sure you are using one that provides robust protections in case your items are stolen or damaged and insurance against things like travel delays, lost luggage and car rentals.
Rewards: Finally, consider getting a card that earns rewards points or miles on the purchases you are going to make. Several airline credit cards offer bonus miles on airfare purchases and at other locations such as hotels, restaurants and supermarkets, while some hotel credit cards earn bonus points when you use them to book stays as well as for things like gas purchases and rental cars. Read up on the earning potential of any credit cards you are thinking of opening or using when traveling to make sure you pick one whose benefits you can maximize.
Although it might not be strictly necessary to carry a credit card when traveling, you might want to do so for several reasons. Many rewards cards waive foreign transaction fees and provide better exchange rates on purchases you make abroad. Some travel credit cards also offer extensive purchase and travel protections that can save you time and money when things go wrong. Finally, carrying a credit card is usually a safer way to travel than bringing along a lot of cash, which can potentially be lost or stolen. You can find current credit card offers and personalized picks through Experian CreditMatchTM.