Among the simplest ways to spend money globally is to use a credit card, but that doesn’t mean taking the credit card from your home country that you use in the day-to-day to make your purchases.
This can mean exorbitant charges. Instead, you should have a “travel-friendly” card, allowing international spending with considerable savings in comparison. It’s typical in your everyday life to combine the use of credit, cash, and debit transactions to accommodate expenses.
When traveling to another country, this becomes complex. Instead of upfront spending, travelers need to plan how to cover their expenses before taking the trip to avoid excessive exchange rates and high fees and charges, whether using cash or credit cards.
In many countries like Norway, travelers can use cash, but the preferred method for spending is credit cards. This country’s objective is to go “cashless,” with other countries trying to follow this same concept gradually.
Is a credit card the best way to avoid exorbitant costs when visiting another country on holiday?
Let’s find out.
Cash vs Credit for the Least Currency Exchange Fees and Charges
When traveling to another country, a primary consideration is figuring out how to pay for expenses upon arriving at your destination. While in this country, it’s standard to use a mix of debit, credit, and cash, more countries are moving away from cash, choosing instead to use primarily credit cards.
That will mean making a plan before traveling since it’s not as easy as just using your home country’s credit card abroad without accruing sometimes exorbitant costs, particularly in exchange rates.
Follow here kredittkortinfo.no/valutapåslag/ for details on currency exchange fees when traveling to another country.
Here are the advantages and downsides when converting cash into foreign currency to take on your trip or using a credit card while away to help with a more informed decision.
Changing cash to foreign currency for spending on holiday
While you can exchange your country’s currency to that of the region where you’ll be traveling, it’s essential to ensure this is a preferred spending method in the country. Norway, for instance, is moving away from cash transactions, encouraging residents and visitors to the country to spend using credit cards.
Here are the benefits and downsides of using cash when traveling abroad instead of using a credit card.
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Cash will be accepted
Despite more countries choosing to go cashless, the form of payment is still accepted for any expense.
When you choose to exchange your country’s currency for that of the country you’ll be traveling to; you’ll have the peace of mind of knowing you’ll be able to cover costs wherever you go with no fear of a card being denied.
Not all credit card brands are universally accepted, which can leave you in an awkward position, particularly if you also have no cash to pay the bill. Always having cash as a backup is vital when traveling outside your home location.
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No fees or charges
If you change your currency before leaving for your trip, you won’t need to deal with the fees and charges often associated with using your standard credit card. The rates can be exorbitant with foreign transaction charges. With cash, you’ll have no surprises about the amount you spend at any given time.
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There is less security with cash
While there are pros to using cash, you’ll also have downsides, as is true with any financial solution. Cash is not the safest form of payment. Carrying money with you, even in your home country, is dangerous nowadays and is insecure.
If you were to lose a credit or debit card, there are steps you can take to prevent extensive loss, while carrying substantial amounts of money can result in theft or loss that is difficult to recover, if at all possible.
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The exchange fees can be costly
Typically, you’ll pay the exchange rate available on the day you purchase the cash at a traditional banking institution, leaving you unable to take advantage of possible fluctuations with the exchange rate while traveling. These fluctuations could or may not benefit you, but it’s the chance you take when using cash.
When withdrawing funds from an ATM, remember that you could incur fees for doing so.
Paying with credit while on holiday
Many countries are moving away from cash as a form of payment, encouraging residents and visitors to use credit or debit to make purchases. Credit cards are much more secure and offer a layer of safety and flexibility that cash can’t.
Here are some benefits and downsides when choosing credit as a payment method when traveling abroad.
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Credit cards are more secure than cash
If you were to travel with cash in a wallet, backpack, or purse, you’re more vulnerable to theft or losing the money with minimal chance for recovery than if you were to go on holiday with a credit card as your spending method.
There’s an added layer of fraud protection if your card is left behind with a merchant or someone takes it. You can immediately contact the issuer to cancel or freeze the account regardless of where you are.
The company will disallow further activity and flag unusual activity while the card has been out of your possession.
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Credit card spending offers greater flexibility
You won’t know how much you’ll need while you’re away. If you attempt to buy currency for the country you’ll be visiting, you could have a lot left over that you don’t use while there. That can mean converting it again back to your home currency.
With a credit card, you’ll only spend what you need, making the payment method much more convenient and flexible than using cash, but that doesn’t mean there aren’t a few downsides.
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The hidden fees and charges
When using your standard credit card abroad as your spending method, many issuers will commonly charge transaction fees equating to a percentage of what you spend for each purchase. This can quickly add up, especially if you intend to make cash withdrawals.
With cash withdrawals, issuers will charge a percentage of the cash funds withdrawn, plus with cash advances; interest begins to accrue immediately at higher rates than standard charges.
If you want to use a credit card with as few fees as possible, consider taking out a credit card designed to be used overseas. That’s especially true if you travel frequently. These often don’t have cash withdrawal fees, foreign transaction fees, currency exchange fees, or other charges.
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The card might be refused
While you might want to use credit due to the safety and security it affords you; it’s wise to bring some cash as a backup in case some merchants refuse your credit type. Most primary merchants, restaurants, and accommodations will take credit as a payment, but not all brands are universal.
With small retailers or independent markets, your credit card could be rejected. Fortunately, most merchants will tell you ahead of time if their establishment does not accept your card to spare an awkward situation.
What To Look for When Shopping for the Best Credit Card for Spending Overseas
If you spend a lot of time traveling overseas, finding a credit card that can follow you on the trips safely and securely with minimal fees and charges is to your advantage. Here are some things to pay attention to.
Transaction fees
The premium credit cards for overseas travelers should have no transaction fees, meaning you won’t be charged added costs when using the payment method for expenses, whether for accommodations, dining, or shopping while on holiday. Click here to learn everything about currency exchanges.
Withdrawal charges
Some credit cards used with overseas traveling come with no withdrawal fees when taking local currency from ATMs during your travels nor will there be interest on cash withdrawals.
If you can’t find a no-interest option, shop for a low interest rate for these withdrawals. Sometimes, the no-interest option will only apply if you pay the balance in full with each invoice.
Final Thought
Before traveling overseas, letting your credit card issuer know that you’ll be traveling outside of your home country and intend to use your card while overseas is a priority.
Without this step, your carrier can flag and suspend the card for suspicious activity. While you can usually clear things up with a few phone calls, you don’t want to be far from home with no funds or any way to correct the situation.
