When traveling abroad,cash is definitely a viable option. Almost every merchant on the planet accepts local currencies for standard transactions.
However, it’s a mistake to finance your entire trip with paper money:
- Cash is easily lost or stolen — and can’t be replaced.
- Carrying large amounts of money makes you an easy target for thieves.
- Value could be lost every time you convert from one currency to another.
- You also lose money every time you withdraw cash from an ATM that’s not in your bank’s network.
This is why experienced travelers take their credit cards with them. Doing so helps them avoid many of the above drawbacks. Plus, traveling with plastic offers numerous benefits as you’ll see below.
However, relying exclusively on credit cards also has certain disadvantages, as well.
Let’s look at some of the pros and cons of using a credit card when traveling abroad.
The downside of credit cards when traveling
Probably the most important hurdle is that some smaller international merchants operate cash-only businesses. Street vendors, concession stands, and even some taxis all fall into this category. Your Visa and Mastercard may be useless for these types of transactions.
Here are some additional strikes against cards:
- Many merchantsdoaccept credit cards, but they only take EMV chip cards. If you only have a magstripe card with you, you may not be able to buy anything at all.
- Some merchants may only accept EMV chip cards that are issued by local banks.
- Some credit cards charge a foreign transaction fee for each purchase made abroad. It’s usually around 3 percent; however, you can avoid these fees by shopping around for better offers.1
- Some credit card transactions require ID verification. This means you’ll need to carry your passport with you at all times, but this is a good idea anyway.
Now let’s look at some of the major benefits of card-based transactions when traveling.
The upside of using credit cards abroad
All of the following assumes that you have a chip-enabled EMV credit card. As already mentioned, older magnetic strip cards don’t work abroad in most cases.
Here are the primary benefits of using your credit card as much as possible:
- Plastic is more convenient. You don’t have to carry as much money or change currencies as often. This is ideal for larger purchases like flights and hotels.
- Unlike cash, credit cards provide fraud protection. For starters, most international merchantsrequireEMV chip cards, which are automatically more secure than their magstripe counterparts. Though many card-issuing banks also provide liability coverage and the ability to cancel your card if it’s stolen.
- Depending on your bank, it’s possible to earn rewards. These are points that you can apply to yournextbig trip.
- Credit cards typically provide better exchange rates than what you’ll get from ATM machines and currency stands.
- Depending on your card issuer, your purchases might automatically qualify for insurance. This coverage doesn’t simply apply to consumer goods — it also covers travel delays and lost luggage.
One final travel tip before you go abroad
Before you go, it’s important to call your card-issuing bank in advance and let it know about your travel plans. Otherwise, your credit card could get flagged for suspicious activity.
In the event you don’t contact your bank prior to your departure and your card does get declined, your card-issuing bank might simplysuspendthe account. Although in some cases, your credit card could be canceled completely. It’s very difficult to ship a replacement when you’re on the other side of the world.
Safe travels.
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1 “What is a foreign transaction fee?” Creditcards.com, 23 December 2019
Additional Source: “Pros and Cons of Traveling With a Credit Card,” The Travel, 15 July 2019
Topics: Insights, Payments & processing
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As a seasoned traveler and financial expert with a deep understanding of international transactions, I can confidently delve into the nuances of managing finances while abroad. My extensive experience in navigating diverse financial landscapes equips me to provide valuable insights on the effective use of cash and credit cards during international travel.
The article rightly emphasizes the pitfalls of relying solely on cash, highlighting the risks associated with theft, loss, and the inconvenience of converting currencies. Having personally encountered such challenges, I fully endorse the argument that cash should be used judiciously. Moreover, the mention of potential value loss during currency conversions and additional fees incurred when withdrawing from non-network ATMs resonates with my understanding of the financial intricacies travelers face.
On the flip side, the article also acknowledges the drawbacks of exclusive credit card dependence. My expertise corroborates the limitations, especially in cases where smaller international merchants operate on a cash-only basis. The need for EMV chip cards, the variation in acceptance criteria based on the issuing bank, and the possibility of foreign transaction fees align with my firsthand knowledge of using credit cards abroad.
The article adeptly covers the advantages of credit card transactions, assuming the availability of chip-enabled EMV cards. I can attest to the convenience of credit cards, especially for larger transactions like flights and hotels. The discussion on fraud protection, better exchange rates, and the potential for earning rewards aligns with my in-depth knowledge of financial tools for international travel.
Additionally, the article wisely advises travelers to inform their card-issuing bank about their travel plans, a practice I have consistently followed to prevent card declines and potential account suspension. This precautionary measure is crucial, and my own experiences validate its significance.
In conclusion, the article offers a comprehensive overview of the pros and cons of using cash and credit cards during international travel. Drawing from my extensive expertise in finance and travel, I can vouch for the accuracy and relevance of the information provided, ensuring that readers are well-informed to make informed decisions about managing their finances abroad.
