I am planning to visit several places outside of London in zone 3. The forum states that you would be charged the additional charge if i pay for zone 1-2, but it doesn't say when. Would an oyster card or travel card be better? My days to use it would be a Saturday-Wednesday so it sounds like an oyster card from what I have read?
An Oyster card (with pay-as-you-go credit on it) is the best option. This cover all zones out to the edge of London (and a little bit more like Watford), not just zones 1-2.
I think all the forum was saying is that the cost would be more for extra zones.
You still "tap in" with your Oyster Card to open the barriers at the start of your journey, and "tap out" at your destination. It will calculate the fare for the actual number of zones, which will be cheaper than buying a paper ticket.
You can look up the actual fares on the TFL website.
A "pay-as-you-go" Oyster Card is not limited to how many days it is valid, credit on it lasts forever.
This map shows all zones the Oyster Card is valid in, and all rail lines it is valid on: http://content.tfl.gov.uk/london-rail-and-tube-services-map.pdf
"The forum states that you would be charged the additional charge if i pay for zone 1-2"
This is only if you are using a TravelCard valid for zones 1 and 2.
As Chris says, if you're using a Pay As You Go (PAYG) Oyster, you'll just be charged the correct amount at the end of each day.
Since you're in London for 5 days (not 6 or 7), a 7 day 2 zone TravelCard doesn't make sense financially - even if you were just staying in zones 1 and 2. So, just get a regular Oyster Card, load it with some PAYG money, and let the Oyster computer figure out the rest. When you run low, just top up the balance. You'll get the lowest applicable fare this way, with no calculation needed.
To answer your question about when you would be charged, if you had a 2 zone TravelCard and wanted to go to zone 3 with it, you would need to purchase an extension fare before you started the journey. Years ago, you could pay the excess fare on exit, but that's no longer the case. The price of the extension depends on which zones you are going through, and whether it's peak or off peak. I can definitively state that in 2018, the off peak price for extension from zone 2 to zone 6 (Heathrow) was £1.50 (I was there 6 days, so a 7 day 2 zone TravelCard saved me a bit of money).
The daily cap for Zones 1-3 is only £1.20 more than for Z1-2.