Cash may not always be the best bet for spending when traveling, whether it's in the US or internationally. Carrying a wallet full of cash can be risky—if your wallet is stolen or lost, the chances of getting your money back are slim.
Using your debit or credit cards can be the safest and most cost-effective way to pay worldwide. It may take some planning ahead, though, to avoid fees. Whether you pay with a debit card or use a credit card, plan ahead so you don't end up paying more than necessary.
Fraud protection when traveling with credit and debit cards
Credit cards come with some advantages when traveling—federal law protects you against unauthorized charges. The law limits your liability to $50 but many credit card issuers offer zero-liability protection.
That protection extends to payments made with a phone (aka digital wallet), online and at physical terminals as well. If you have a credit or debit card linked to your phone, you have another convenient and secure way to pay.
To protect yourself, setting up alerts can help you manage your cards and stay connected to your accounts 24/7. As soon as a purchase is made, a text or email notification can alert you to the activity.
Traveling with a credit card
Before you travel, find out if your card issuer prefers to be notified of your travel plans—not all do, these days. To set a travel alert, call the toll-free number on the back of your card or log in to the website to let the card issuer know where you're traveling. Doing so will reduce the chance of your transactions being flagged as unusual and possibly declined.
Security against fraud is key, but a secondary benefit of using credit cards is the perks. If you use your credit card to book travel, there may be some benefits offered that could help with your trip. Coverage and benefits vary across cards, so it can make sense to research what's out there if you have time:
- Emergency card replacement and emergency cash disbursement
- Travel insurance
- Travel accident insurance
- Lost luggage reimbursement
- Roadside assistance
- Travel and emergency assistance services
- Car rental insurance
If you're traveling by air, some credit cards can even get you access to airport lounges—though these cards typically come with an annual fee.
Using credit cards internationally
If you're traveling internationally, credit cards may be able to help you save money converting dollars to the local currency. Purchases made with a credit card typically get a much better exchange rate than you can get from a currency exchange vendor or banks because your card issuer offers close to the best rate available as it's set by the major networks, Visa® and Mastercard®. Those 2 payment networks facilitate payments around the world between businesses, banks, and consumers. There are other networks including Discover® and American Express® but Visa and Mastercard are more widely accepted.
A potentially more expensive option for making purchases when traveling is Dynamic Currency Conversion (DCC). With DCC, merchants or banks can process a transaction in the customer's home currency for an added fee.
The service is often touted as a convenience to customers by allowing them to see exactly what they're paying at the time of the transaction rather than having to wait for the charge to post online or show up in a monthly credit card statement, but many experts feel that it is simply another way for banks and merchants to charge additional fees to unsuspecting customers.
But there are some other costs to keep an eye out for as well. A network fee may be charged, depending on the policies and features of your credit card. Credit card networks charge the fee to your bank and the cost is generally added to your purchase.
That is typically included in the total foreign transaction fee charged by your card, up to 3% of each purchase. That can add up. If you shop around ahead of time for a new card with no foreign transaction fee plus cash-back rewards—like the Fidelity® Visa Signature Card—you could potentially come out ahead.
Traveling with a debit card
Since credit cards offer more fraud protection, you may want to use them for most of your travel spending. But you may still need cash, which is the time to shine for debit cards.
But be aware of the fees that can come with withdrawing cash. Reimbursement of ATM fees can be a helpful and economical banking feature. If it's not offered by your financial institution, it could be a good idea to shop around before embarking on a trip. The average ATM fee in 2023 was nearly $5.1
The Fidelity® Cash Management Account automatically reimburses you for ATM fees charged by other institutions2 while using the Fidelity Debit Card3 at any ATM displaying the Visa®, Plus®, or Star® logo.
Using debit cards internationally
Taking money out of an ATM in a foreign country typically incurs a fee from both the local bank that owns the ATM and your bank at home. So, researching when and how you will be charged fees can pay off. That's because some debit card providers don't charge fees for using foreign ATMs—and a few may even reimburse fees charged by the foreign bank. Planning withdrawals in advance can help you minimize any fees that could be charged.
