Updated: 5/10/2012 2:50 PM ET|
Travel protection? Your credit card
You can go abroad without plastic, but there are many advantages to having it, including protection against potentially serious problems.
Safety in numbers, we're always taught. It's smarter to go out late at night with someone accompanying you than to make your way alone, and those who hike in the rugged wilderness without a companion could wind up like that guy in "127 Hours." Some personal finance and travel experts offer a similar take on traveling in foreign lands with creditcards. You're better off with them than without them.
Not that you shouldn't bring along some cash. If you don't, that could be problematic as well. "You can't go to the souk in Istanbul with a credit card. You've got to pay with cash," says David Litman, the CEO of GetaRoom, a hotel booking site that specializes in finding low rates. "There are people you will have to tip, and that's generally going to be with cash. You have to have a mix, but everything I can put on a credit card, I do." (Looking for a better credit card? Find one here.)
Think this is overplaying the idea that traveling without a credit card could invite disaster? Consider the following:
1. If your cash and cards are lost or stolen, only credit cards can be replaced immediately. For example, if your hotel room is broken into and your cards are stolen, your first call should be to the local authorities. Then, you'll want to call the issuing bank to notify it of the theft. The best credit card companies will send you a replacement immediately and make sure you're financially set to continue your journey or return home. That's a part of their customer service.
With a debit card, as long as you call your bank within two business days, even if your checking account was cleaned out, you should eventually get all of your money back, except possibly the first $50. But you likely won't see it until the next business day, which could mean begging the U.S. embassy to put you up for a night.
And if you brought only cash and that's what was stolen, keep your fingers crossed that the authorities rival their fictional counterparts on "Law & Order" or "Hawaii Five-0." Then, just maybe, you won't have to beg your family members to wire you enough money to get back home.
2. If you become sick, a credit card can speed up your treatment. Sure, it's unlikely, but Litman throws out a pretty terrifying scenario: "Let's say you're in Zimbabwe and you come down with dysentery, and you need $20,000 for a private aircraft to take you to another country where you can get better treatment," says Litman. "If your limit is $10,000 and you need your credit raised, and you explain what's going on and can fax over a doctor's certificate, they'll give you that."
That's a lot of hypotheticals, and the outcome would depend on your relationship with your credit card issuer -- we can imagine situations where you're still out of luck -- but his point is well taken. If you're stuck in another country with a desperate need for money, your odds of getting some quickly are a heck of a lot better with your credit card issuer than with your debit card's bank or having to wait for your relatives to collect and wire over the funds.
3. Credit card exchange rates won't drain your budget as fast. True, many credit cards charge a foreign transaction fee for purchases. But even then, it's usually cheaper to pay the fee than to convert your U.S. dollars or traveler's checks into foreign currency.
Why is it cheaper? "Credit card purchases are exchanged at the interbank exchange rate, usually the best rate one can get for currency exchange," says Howard Dvorkin, the founder of the nonprofit Consolidating Credit Counseling Services.
4. Credit cards won't accidentally pay the wrong amount. Wouldn't know a rupee or a peso if a Brink's truck full of them crashed into you? Think about the scenarios that might happen. "If you're not familiar with the currency, it's so easy to put down the wrong bill," Litman says. "I've seen that happen, and while most people are honest, some are not."
Speaking of dishonest people, most major credit cards offer purchase protection. Whether that protection covers purchases made outside the U.S. depends on your issuer and your relationship with the issuer. But it's just another reason many people swear by credit cards for all their shopping at home and abroad.
5. Credit cards make it easy to rent a car, secure a hotel room or book a flight. A lot of people love traveling with credit cards because of the travel perks. The best credit cards, for instance, will let you collect frequent flier miles. Even if you aren't one of those people, a debit card will get you a flight just fine, but paying for an airline ticket with cash can be problematic -- and even cause suspicion from an airline. In this post-9/11 era, do you really want that?
And paying for a hotel room or a rental car with a debit card can be even trickier. You may come through perfectly OK, but you'll want to call ahead if you can, to make sure that the rental car company accepts debit cards. Then you'll want to ask if the company will make you pay a deposit for renting a car. Some companies will tack on an extra $200 or $300 retainer that won't be available in your checking account until you return the car.
Some hotels may let you hold the room with a debit card but then turn you away at the desk when you try to pay with that debit card. Or they may let you pay with the debit card but add on one of those holds of several hundred dollars.
And given that it can be hard enough to stay in a hotel and use a rental car in America with a debit card, you can imagine how things might go in another country if you also have a language barrier to overcome.
In the end, is it possible to travel abroad and be just fine without credit cards? Of course. But credit cards are arguably the best insurance travelers have that their photo album isn't filled with pictures of the family sleeping on a park bench next to the London Underground.
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To those who have had trouble with cc's - to avoid that, make sure you notify your credit card company that you will be traveling and where and you should have no trouble. I even do that when I am traveling in the states. Tell them your layover countries, where you will be through what date range, and you are fine. I've never had trouble traveling with a cc doing this. I've also found that plenty of places accept cards. I went to Poland for a week, traded out $200 cash for the local currency (they are not on the EU), and didn't even use all my cash. I was able to use my cc almost everywhere.
There is one big perk to using a credit card when renting a car that a lot of people don't know about. If you get into a wreck in a rental and don't purchase the Collsion Damage Waiver, credit card companies can help out big time. Your insurance would be primary for the rental damages, but rental companies charge admin fees, and loss of use (the money the company loses for that vehicle being out of use)...plus you will have to pay your deductible. If you report the loss with your credit card company, they will cover ALL of that. Most of the require you to report it within 15 days of the accident, though. Just a hint!
"789".................one more thing..........you wrote: "things cause twwice as much here then at home" - (meaning more expensive in eu, than usa etc...)
well my dear, its all relative......
thye reason 'why;' its twice as much, is because the dollar is worth NOTHING!!!!!
but to the avg danish, french, italian, etc.... its 'every day prices'....
id rather be a poor frenchman, or poor danish, or poor italian, live in eu, then be a poor american!!!
cause youd still have a 'great life' in eu, where the europeans 'know how to live' and "work to live', whereas americans "live to work"
its all in yr head, and is relative...... ;-)
The fees for a cash loan on a CC are
expensive. I used my bank card in a
ATM in Costa Rica and the fee for
a cash withdrawl from my savings
was only $2.
When are we going to tell the truth?
Go to Denmark (now for 2 years) and you better bring cash in this at the world standard top country, they have a chip in the card, and you type in a code, or you might as well leave the US cards alone, no one takes a mag strip card.--far better security
I have several times discussed this with AMX and Citi Card, and they "pretend" there is no problem, but you can not use the cards, regardless of credit limits!
And most things like hotel/cars etc cost at least twice as much as here, I just spent over 10 K for 12 days there, and is typical in northern EU, as we travel there all the time.
Pudd has it correct. ATM's give the best rate, if they accept your local bank. I wandered Rio to find HSBC is the best for S.A. Different in Asia, Europe or Middle East.
Next are credit cards. Small fees and VERY SAFE! Bon Voyage!
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