Ten years ago most people travelling would have used traveller’s cheques. They were fast convenient and offered a huge amount of protection. You could have them replaced within 24 hours if they were lost or stolen and you could use them in any bureau de change anywhere in the world. However, traveller’s cheques have seen a significant downfall in popularity in recent years, as people start to trust and rely on credit cards more and more for travelling. Here we look at the pros and cons of using credit cards for travel and whether credit cards are actually now your best option.
The Benefits of using Credit Cards for Travel
We’ll start by looking at the benefits of credit cards for holiday. The core benefit is that you can use your existing cards and have ready access to your money wherever you are in the world. Credit cards are accepted in every country in the world and are the easiest payment form there is. The second largest benefit, and really the reason for credit cards increasing popularity, is that they are exceptionally well protected wherever you are in the world. Credit card fraud is protected the world over so if your credit card is lost, stolen or used for fraudulent activity your money will be protected. Before you travel you should notify your credit card company that you are going away but otherwise you are completely safe and secure using your credit card abroad.
The Downsides of using Credit Cards for Travel
While the benefits speak for themselves the downsides are less well known. The main downside for using credit cards for travel is that it is not always very easy to have them quickly replaced if you lose them or they are stolen. Some travel credit cards will boast this feature but you will normally have to apply for this separately. The other core problems are that normal credit cards tend to charge you for cash withdrawals abroad or for foreign currency exchange. This means that your standard credit cards are probably not suitable for travel. Rather you will have to apply for a separate travel card for your holidays. This isn’t a huge problem and you can get a lot of perks like free replacements, 0% interest on currency exchange and using cash points worldwide for free. Of course you also need to consider any associated risks of using credit cards at any time but these are true of any form of financing.
Alternatives to Credit Cards for Travel
The current alternatives to credit cards for travel are debit cards, cash and of course traveller’s cheques. Debit cards are one of the least used methods for abroad because they are less secure than credit cards. While your money is protected to a degree the reality is that you will find it much harder and more time consuming to reclaim your money if you are the victim of fraud or lose your card. In addition you tend to be charged a lot for cash withdrawals abroad and will usually receive a slightly lower rate of exchange on foreign transactions – meaning it costs you more to use your card abroad. Finally, cash is of course essential wherever you travel abroad. However, no one really wants to have hundreds and hundreds of pounds “lying around”. Even if you have a safe in your hotel having cash is still a vulnerability. If you want to make any large purchases on your holiday you won’t want to have carry that much money around. Finally traveller’s cheques remain one of the most secure ways of carrying money around but they are less accepted than they once were. They give you a very high level of protection but are less readily useable than credit cards.
Choosing a travel credit card
If you decide that you would like to use credit cards on your travels then the best thing to do is get a travel specific card rather than using your standard cards. While you will have to go through the rigmarole of setting up a new card the added benefits of a travel card usually make it more suitable for travel. These cards sometimes come with higher interest rates so using a credit cards comparison site is a must to get the best deal. Travel cards tend to not be suitable for your day to day credit uses so don’t rely on them outside of holidays. Finally it might be worth considering pre-paid credit cards for travel as these give you the highest levels of security and ensure that you don’t overspend on your holiday – always useful in our experience!