The last thing most people worry about while planning a trip abroad is how will they spend money during the trip. If you are one of those who give little thought to this before venturing on your holiday, you may very well end up losing a substantial portion of your money to various fees. 

Bet that’s not how you would have envisioned spending your travel money. So, the question is, how do you avoid such fees before you begin your trip? It all boils down to figuring out the best way of accessing and spending money while on holiday.

Today, there are many ways of accessing money while on holiday abroad. You could choose only credit cards and set the cash aside safe in your bank account for paying the bills to post your vacation. Or you can go for a debit card to make sure that you don’t end up overspending, which could sometimes be the case with credit card swiping. But you may still ask, which is the best option?

There are a lot of factors which can influence your choice, such as, your habits, preferences, awareness, etc. While choosing between credit and debit cards, the first thing to keep in mind is the amount of fees that each will charge and if either can potentially help you earn some money.

Debit vs Credit Card – Which is Better?

Using a Debit Card – The first thing to remember is that when you use a debit card, you would be using cash. Whether it requires you to enter a pin while making a purchase or has the “credit” option, the money still comes out of your account within a matter of a few days. If you don’t want to take the risk of overspending, this can surely be a very good option. 

As easy as it may be to simply swipe a card, you may still have to manage with a limited amount of money in your bank account. Another reason why using a debit card makes sense is that it can be an ATM card as well. So, if you need cash, you can easily get it by using your debit card. Just be cautious about hefty ATM charges and also exchange fees. The biggest drawback of using debit as against a credit card is that in case your debit card is hacked; your bank account is at immediate risk.

In such a scenario, if you don’t own a credit card then it could have an adverse effect on your entire trip while you wait for your account to get sorted and funds to be available. You may also face major financial issues in case your bank account information gets leaked and the funds are stolen. If there are any pending transactions or in case cheques suddenly bounce, this could hurt your credit score too. While such issues can still be sorted out, in case your debit card gets stolen you may end up dealing with bigger problems.

Additional Reading: Best International Travel Credit Cards in India

Using a Credit Card – When it comes to a credit card there are fewer limits with regards to spending. As long as you have a higher credit limit you can have access to sufficient funds. The problem arises when you end up overspending due to the convenience that a credit card offers. The advantage of using a credit card during travel can be a double-edged sword. It allows you to spend as much as you’d like but you need to be careful not to use most of it since you will end up paying it entirely from your pocket later.

One of the reasons why a credit card is preferred for foreign travel is that in case it’s stolen, you don’t end up losing access to the real money. A backup card may still be required if such a situation arises. There are chances that your account is suspended until the situation is resolved. The flip side of using a credit card while travelling abroad is that you cannot use it at ATMs for accessing cash available in your bank account.

Therefore, if you happen to visit a cash-only establishment, you may get stuck without any cash or access to a debit card for withdrawing any money.

Ideal Approach

Since both credit and debit cards have an almost equal number of positives and negatives, the ideal approach here is to go for a combined approach. Instead of contemplating whether you should use a credit card or a debit card, make sure to take both along in your travel. This will help you to be prepared for all kinds of situations as mentioned above. Especially when you are far from home, it makes sense to be prepared. When you have to decide on which one to use while abroad, make sure to dig deeper into your spending habits to know the answer.

If you fear to overspend, go for a debit card. On the other hand, if you fear fraud, choose a credit card. While credit cards don’t necessarily prevent frauds, your bank account can be kept safe even if there is a fraud. Choose the option which works for you and you are comfortable with. Today, there are multiple ways to gain access to your money while travelling abroad. 

Additional Reading: Importance of Having a Travel Credit Card

Important Things to Know About Fees

While travelling, most people tend to worry about foreign exchange rates. While this is a valid concern, depending on the place you visit, your money may double or go down in value as compared to home. This concern can be addressed by making sure you have a budget in place before you venture on your travel. Also, the foreign exchange rate is not the only aspect that may cause concern. A lot of times, the fees attached to foreign transactions is what can cost you a lot of money. 

Foreign transaction fees are levied on every transaction made while travelling at a foreign destination. While these do not sound like they may cost you a lot of money, they can start adding up and before you know it, the final sum could be exorbitant. This could be especially expensive if you are not carrying any cash during your travel.

Let’s say, for example, you buy breakfast, and other meals while travelling. Even three meals a day will make up for three transaction fees charged per day. And this is purely exclusive from the expenses related to train tickets or buying souvenirs or visiting any cultural events, etc.

Multiplying only these 3 fees into a one-week-long trip will make you realise that you are paying nearly 3% out of 21 transactions. 

Hence, no matter which card you use for spending your money during your travel abroad, always ensure it’s one that doesn’t charge foreign transaction fees.