Debit card vs. Credit Card while Traveling

Debit cards work to get cash from ATMs and many businesses appreciate or only accept cash. And they can be used for purchases, assuming they have a Visa or MasterCard logo, which are also the most widely recognized for cash withdrawals. Some on this forum advise against using a debit card for purchases, but I've never had a problem with it.

So I guess the missing "security blanket" is in case of a emergency that costs more money than you have in the account? I do like to have more than one card on hand in case one has a problem, like getting de-magnetized or being put on hold after one has purchased something "suspicious."

Do you really have to destroy the cards in order not to use them? How about putting them in your suitcase now, so you don't use them unless you're traveling?

Often you will get a discount if paying in cash, especially small hotels. So definitely take a debit card.

But I would not travel abroad without a credit card, just in case. You certainly can live-debt free and have a credit card; we do (apart from the mortgage). Just pay off the card promptly each month.

There are many CC that don't charge yearly fee and have no foreign transaction fee on your purchases. If your debit card stops working or gets stolen you still have your CC to be able to still enjoy your vacation. I think you are right in looking at it as a security blanket. You don't have to use it if you don't want to do it. You can always cancel it once you are back home. But eventually it comes down to what you are comfortable doing. Have fun.

First, you might get more responses to this if you post it under "General Europe" instead of just Spain, since your question isn't really about Spain itself. Second, no one else knows your financial specifics, like how much "a decent amount" is, so you can expect only general ideas, not tailored advice.

It's not "an awful idea," it might work fine as long as your "decent amount" is enough to meet any foreseeable problems, like a medical emergency or missing a flight home and having to buy new tickets. You might look into travel insurance as an alternative "security blanket." I'm sure you know to notify the bank of your plans and find out your daily withdrawal limit (which you might ask them to increase for the trip). It would be safer for each of you to carry a separate card in case one is lost or stolen.

Limiting yourselves to debit cards will keep you from incurring debt beyond the amount in your account(s), consistent with your good goal of being debt-free. You'll lose the convenience of using credit cards for major purchases, like hotel rooms or fancy dinners or big buys, but you may be able to use debit cards for some of these and for others you'll have to use cash, which might help keep you from spending as much as otherwise.

In other words, the pros and cons seem about the same abroad as at home, but consider travel insurance if your bank balance isn't enough to cover contingencies. Hope that helps.

I think you will want a credit card. Bring one with zero balance and no foreign transaction fees. If you don’t want to use it, dont. But it’s there in case of emergency.

Also you generally can’t rent a car on a debit card.

Debit cards also may have higher fees for international purchases. So anything you can’t buy in cash will cost more. I’m thinking train tickets bought ahead, hotels booked from home, and plane tickets on international carriers like Iberia.

Finally, in general I think having a low-or-zero balance card is good for your credit score. Canceling cards is a bad idea because the credit score is calculated partly on the balance vs available credit ratio. So a card with no balance and thousands available is a sign of responsibility. Which ups your credit score which will help you with interest rates etc. I’m not an expert, look into this for your specifics, but it’s something to consider.

Sticking a debit card in an ATM, getting cash and spending the cash is just fine. (Unless your card gets stolen, stuck in a machine, canceled by your financial institution, etc.) Paying directly with a debit card is generally not considered a good idea, because debit cards do not offer the financial protections a consumer gets when using a credit card. You can dispute an incorrect credit-card charge, and the merchant has to satisfy the credit-card company that the charge was legitimate. If someone does something funny with your debit card (or the number of your debit card), it can be a lot more difficult to recover the money. Sometimes you don't ever see the money again. I figure the fewer people who see my debit card, the better off I am, so that card only gets shoved into ATMs. And I do travel with a back-up ATM card just in case.

I think the bottom line is: do you have the self-control to avoid spending more than you make because you have credit card(s)? That's really the only reason to get rid of all your credit cards. If you could pay off the balance every month - knowing you charged $500 and have $500 reserved in your account to pay it when the bill comes next month - there's no reason to get rid of a credit card, if it has no fees and no foreign transaction fees. Because they don't cost anything if you pay the balance every month - no interest.

But I know some people lack the self-control to manage their money this way; if they have a credit card, it's too tempting to spend beyond their means. If you are self-aware enough to admit that you are one of these people and need to get rid of the temptation to stay out of debt - good for you! I encourage you to get rid of your credit cards then - or at least limit yourself to a card that forces you to pay it off every month (used to be Amex - do such cards still exist?). Or perhaps a card with a really low credit limit, if that's possible, for emergencies. (A card like that probably won't work to rent a car, though.)

You can certainly get by without a credit card in Europe (as noted above, renting a car without one these days may be difficult). It's perhaps a little more work, and if your ATM card incurs fees with each use, might cost you a little more. Not really sure about using a debit card in Europe to make purchases - not sure I've ever done it.

I get the security blanket because I am a worse case scenario type person. I always bring a credit card with a large limit in case of an emergency (someone in sick at home, we get hospitalized, we need emergency lodging etc) that card lives in my bag and usually never sees the light of day. I use my debit card to get cash from an ATM only and I have a separate account that it is tied to, in case of theft they don't get my daily living money. This happened last trip, my card was cloned and ATM withdrawal attempts were made in Portugal but end of trip only had $700.00 in there and my bank called and I cancelled the card. My Friend was using his ATM/Debit card tied to his household account, they got him for $3K. With dispute rights he got all of it back.
I take an additional "daily spending" credit card that we use for all food, entry fees, transportation etc. It sounds like your disciplined enough to pay the card back. I think your focus should be on reliability of payment during your trip by using a combination of cash and credit card.

Credit cards afford you some rights that a bank ATM card may not cover. Some credit cards come with secondary physical damage insurance for rental cars and even extended warranties on purchases. And if stolen, your rights on an ATM card are not as good.
We use ATM cards just to get walking around spending money. Rooms and anything we can charge is done on a credit card when traveling. Because you have a credit card doesn't mean any balance has to remain on the csrd. And you don't have to use it to keep the lines open.

Congrats on your goal of debt free! That is a great way to operate . Having a credit card and living a debt free life are not mutually exclusive. I use my credit card when ordering items online, renting cars, buying airfare, traveling, etc and it gives me extra convenience and features such as travel insurance. If my credit card becomes compromised, it is an easy fix. If a debit card becomes compromised, your money may not be replaced for up to a week or more and this could be a huge issue when overseas.

The key to having a credit card and living debt free is to pay off the balance each month entirely. Make it a hard and fast rule to never carry a balance. If you don't have that sort of self-discipline, then you are right to be concerned. Otherwise, a credit card can be a convenience is used correctly.

For travel, I use two cards. The first card is a debit card through Charles Schwab investor checking. This card has no ATM fees worldwide and no foreign transaction fees. I put a budgeted monthly amount into this account and keep it exclusively for a travel fund. I know right from the start what money is available for any trip I might want to take. The second card is a credit card with no foreign transaction fees and significant travel insurance perks associated with it. I may charge something on vacation for convenience, but I immediately pay it with a check from the travel account upon my return home.

The beauty of debt free living is that you are in charge of your money, not your money being in charge of you. You don't have to be afraid of having a credit card if you use it correctly.

Hi Paige,

Not that you mentioned Dave Ramsey, but on the off chance you are following him...

I love Dave Ramsey but I don't think he's 100% right about not needing a credit card ever. He routinely makes statements about how he can do everything with a debit card that a credit card can do. Sorry, but in my state that simply isn't true... for example, I couldn't rent a car at a competitive rate without an actual credit card.

Ramsey also gave this caller who was asking about the best way to get cash in Spain the other night some terrible terrible terrible advice... I was cringing.

I use the Every Dollar budget and I use a credit card. I pay off everything I spent on the last day of the month I spent it in. And I get rewards to use toward future travel. That's a win/win in my book.

I would go with 2 debit cards.
Spouse 1 and spouse 2.
What if a machine eats your card?
You need a debit card to get cash (without a rapacious fee).

I would go with 2 credit cards.
1 Visa and 1 MC.
Just in case.
Just dump some money into the account(s) in advance and you will feel better.
My experience in Europe is that your card is never out of sight. They bring the machine (terminal) to you.

Most lodgings require a credit card to reserve in the event that you are a no show. You can easily pay in cash once you arrive, but I would never give up the security and convenience of a CC. Just learn the discipline of not using it. That is what helps make you debt free....discipline.

Make sure you understand how debit card ”holds” work. For this reason, I always use a credit card for reservations. There are some situations (like car rentals) where a credit card is either preferable or necessary.

I will repeat what someone else said. You can be debt free and use credit cards. If you exercise discipline in spending, you can leverage the convenience of credit and pay the balance in full each month.

I think traveling with just one debit account is very risky, if that fails, you are stuck, and likely you have a daily limit that may cause issues. I always have back-ups, at least two debit accounts and two credit cards.

I also have several cards that have zero balances and have not used in the last year, so simply having a card need not cost you or affect your debt situation.

I highly recommend each of you carry a different card just in case something happens to either of your cards, the other will have a different card to use.

I would definitely take a credit card as an emergency backup. I also like the idea of each of you taking a debit card. Watch out for the dreaded Dynamic Currency Conversion (DCC). When you make a purchase or withdraw cash from an ATM, you may be asked whether to charge your account in dollars or in local currency. They will often have some kind of an encouraging sentence about knowing your dollar amount. ALWAYS choose local currency. The DCC rate is always unfavorable to you; that's how they make their money. Don't use your credit card to withdraw cash unless it is absolutely necessary, since it's considered a loan and you'll be charged interest on the money from the day of the withdrawal.

When my credit card stopped working on my last day in Italy, the bank had a new card delivered to my Spanish hotel 48 hours later. When I lost my ATM card in Spain (another trip and my own carelessness), they would only send a replacement to my home address.