Credit Card vs Debit Card: Which to Choose?

One of the most common questions I see in groups and forums online is how to pay for things in international currency. Should I get cash, credit card vs debit card, or how to find the best exchange rates.

I’ve talked about how to access cash in this post, but now, let’s take a look at whether to use a credit card or a debit card while you are travelling.

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Which do I choose: Credit Card or Debit Card

To be fair, I use both – there is certainly a time and a place for each of these cards when travelling, but my most used card is my credit card.

It’s important to note that both my credit and debit cards are ones I specifically hold for travel, both with no international transaction fees.

Here are the reasons I use a credit card rather than a debit card.

Enhanced Fraud Protection

Credit cards often come with superior fraud protection compared to debit cards. Most credit card companies offer zero liability policies, meaning you won’t be held responsible for fraudulent charges.

If someone gets a hold of your card details and makes unauthorised purchases, your money remains safe while the credit card company investigates.

We “tested” this when my husband was pickpocketed on the Metro in Paris. We immediately called the credit card company. They cancelled the card and reversed the transactions that had been done in the short time it took us to call.

So we didn’t have to pay those charges when the bill came in, and we didn’t hear another word about it. It was resolved with just that one phone call.

Separation from Your Bank Account

When you use a credit card, you’re not directly using your own funds. This means your personal bank account isn’t exposed if your card details are compromised.

In contrast, a debit card is linked directly to your bank account, and fraudulent transactions can drain your funds, potentially causing financial stress and inconvenience.

If the pickpocketer above had got hold of our debit card and used that cash, we likely would never have seen it again. And in the meantime, we no longer have those funds to spend on our trip.

Being stranded with no access to cash is not my idea of a fun holiday *shudder*.

Easier Dispute Process

Disputing a charge is typically more straightforward with a credit card. Credit card companies usually have dedicated teams to handle disputes and can provide temporary credits while they investigate.

This process tends to be faster and more customer-friendly than with a debit card, where getting your money back can be more complex and time-consuming.

As I mentioned above, one phonecall was all it took and the charges were reversed.

Travel Benefits and Rewards

Many credit cards offer travel-related benefits like travel insurance, rental car insurance, and emergency assistance services.

Additionally, using a credit card can help you earn rewards points or cashback, which can be especially beneficial for frequent travellers. These perks are generally not available with debit cards.

And don’t forget the points and miles. The more I spend on my credit card, the more points I earn towards my next trip – which is one way to help me justify the cost!

Building Credit

Using a credit card responsibly while travelling can also help build your credit history and improve your credit score.

This can be beneficial for future financial needs, such as applying for loans or other credit cards with better rewards and benefits.

See, I can find all sorts of good reasons to keep spending on holidays – it even helps my credit score – so long as the card is paid off in full before the due date, of course.

Foreign Transaction Handling

Credit cards often handle foreign transactions more efficiently, offering better exchange rates and sometimes even waiving foreign transaction fees.

This can save you money and make your travel experience smoother, especially when dealing with multiple currencies.

In essence, using a credit card while travelling provides an extra layer of security and convenience, allowing you to focus on enjoying your trip without worrying about financial mishaps. It’s all about peace of mind and making the most out of your travel experience.

So When Do I Use a Debit Card?

There is really only one scenario where I use a debit card – and that is to withdraw cash from an ATM.

I set up a special account just for travelling, and transfer just enough money into it. This account is not linked to any of my other accounts. It works like a standard Travel Money card, but without the terrible exchange rates those cards have.

One of the best options to use is Wise, a multi-currency account with great exchange rates. I currently have accounts set up for AUD, USD, EUR & GBP, which makes it really easy to move these currencies around.

But I also use it for taking any currency out from an ATM – it just does the exchange as a normal debit card does, taking from the account you nominate.

Wise is my first preference when I am receiving payments in other currencies too so that I get the best exchange rates when I transfer to my AUD account.

Take a look at Wise for yourself!

Read these great travel tips next
What I Packed – 8 weeks, Hot & Cold
Should I Tip?
Eating Well While Travelling