The days of travellers’ cheques are long gone and even travel money cards seem to be on their way out. But what about a credit card? We say, this is a Must Have, for multiple reasons including:
Hotel check in
Most hotels log a credit card in order to check you in and will not accept cash or debit cards. This is to cover them in case guests use the mini bar, damage the hotel room, or refuse to pay on check out. Even if you have paid before arrival, some hotels will still not check you in without a card.
For example, we had a female client who arrived at a hotel in New York and did not have her credit card with her. As a result, they would not allow her to check in and she ended up sitting in the lobby for 3 hours in the middle of the night while we (in a different time zone) tried to make an alternative arrangement for her.
Car hires usually insist on a credit card in order to take the car, even if you’ve already paid for your car hire in advance and left a security deposit. This is to cover them in case a renter doesn’t return the car or damages it so much that the cost of repair is much higher than the deposit. It also covers them if the renter gets a traffic violation fine, which may only get sent to the company long after the car has been returned. With a debit card, there might not be sufficient money in the account to cover it.
Therefore, if you are renting a car, you will need a credit card. Remember, the card needs to belong to the main driver of the car.
You can withdraw cash with a credit card in foreign currency from most ATM machines in most countries. There will be additional charges for this but it’s still very convenient if needed. Sometimes, the exchange rate you get when using one of the major credit cards may even be better than when using a bureau de change or getting cash at your bank before you go.
Be aware that there may be a foreign transaction fee which could be steep. Ask for the Ts & Cs of your credit card to be sure what costs you could be in for.
Some credit cards offer travel insurance or purchase protection for any travel that you paid for with that card. Check all the fine print first before relying on this as additional insurance (e.g. for medical) may still be required.
If you lose a stack of cash, it’s gone for good. With debit cards, by the time you put a hold on it, money may already have been removed from your account and it may be much harder to get this back. If you lose a credit card, it’s usually fairly quick and simple to put a hold on the card in order to stop anyone from using it. It also tends to be easier to reverse fraudulent charges made on a credit card via your bank, for example, with chargebacks.
There may be rewards for using your card for travel such as air miles, points, or cash back – check with your bank or look for a card that offers these. This means you could be earning while you’re travelling.
Unfortunately, despite one’s best efforts, things can go wrong when you travel. Even if you prefer to stick to cash, debit, or a travel money card, if something major goes wrong, for example, you are in an accident or get very ill, all your luggage goes missing and needs immediate replacement, or you urgently need to book a plane ticket home (just some of the things that have happened to our clients over the years), having a credit card can give you the emergency backup that you need.
Important notes on travelling with your credit card
- Research different credit cards to find out which will suit your travel needs best. Look for cards that offer travel and purchase protection, low foreign transaction fees, rewards, wide acceptance, ease of use, and blocking, in case of theft.
- It is important to advise your bank before you travel that you will be using your credit in another country. If you don’t, many banks will flag your card and it could be blocked, leaving you stranded with no access to money.
- If the card is only to be used for emergencies or to hire a car, for example, and you are worried that you may be tempted to over spend on it, make it harder to access, for example, wrapping it in foil or keeping it separate from other money.
- Check the destination country and make sure your card is accepted there (for example, some places don’t accept American Express but do accept Visa) and if you need a specific type of card (e.g. ‘chip n pin’).
- Be aware that there may be higher admin costs involved in withdrawing cash from ATMs using your card and budget accordingly.
- Remember to pay the card off quickly to maintain a good credit score.
- We recommend also carrying a little cash as some places, particularly in rural areas or at markets, may not accept cards.
Note: The above is intended to assist you in planning and does not replace the advice of a registered financial services provider. Please consult with your foreign exchange expert or travel agent for more information.