Travel Debit Cards

27 October, 2011

Debit cards are one form of funding people may take along when traveling. If you are traveling, especially overseas, it is a good idea to consider your options.

Debit cards allow users to swipe a card to make a purchase, like a credit card. However, instead of buying on credit, a debit card withdraws funds directly from a linked checking or savings account.

According to one study released in March of 2008 by the Federal Reserve, the number of people who are using debit cards is increasing. The study showed that Americans used debit cards 30.4 billion times in 2007. The average purchase was $41.

Overseas Debit Card Use

In some cases consumers can use debit cards while traveling without any problem. In other circumstances, there may be some risks associated with using these cards internationally. Some banks allow account holders to use cards overseas, while others do not.

Using your card overseas may also impose larger-than-normal fees, which will differ from one bank to another. If you are overseas, the financial institution will make the currency conversion at the current rate, which may or may not be what you could pay locally. Check with your individual financial institution to determine these circumstances.

If you plan to use your debit card overseas, contact your financial institution prior to your trip and alert them of your travels. Otherwise, the financial institution may prevent use of the card as a fraud protection service, based on it noticing that your purchases are in an unusual location.

Risks Associated with Overseas Use

A risk factor is the speed at which money changes hands. With a typical credit card, the consumer receives a statement a few weeks after the charges. They then have 30 days, under the law, to dispute the charges on that card. With debit cards, the money leaves the account nearly immediately. Consumers are faced with the potential of bouncing checks they may already have in the works.

Before using debit cards while you travel, consider the risks and limitations these cards impose. In some situations you may be better off using a credit card while you travel and then paying off the balance when you arrive home.

Security holds can be a factor. Rental car companies, hotels and other travel-related businesses may place a hold on the funds in the account as a type of security deposit. These businesses often consider debit cards a greater risk than credit cards and may limit your available funds.
Car rental companies may not accept debit cards. Some companies that do accept them only do so in specific situations. You may need to show a utility bill or have a credit check.
Most debit cards do not have any type of perk associated with them. Unlike travel credit cards, you are unlikely to earn any rewards from using a debit card.

Because of these risks, you may not want to use your debit card when you travel. If you do plan to use them, call the bank to ensure you can use the card easily.

If you plan to travel and do not want to use credit cards, debit cards are not the your only option. Consider these options:

Traveler’s cheques. American Express offers these worldwide.
The Visa TravelMoney card. Use it worldwide wherever Visa is accepted. You can add funds to the account and are protected from liability.
The MasterCard Travel Card is similar to the Visa card. Put as much onto the card as you want and use it anyplace where MasterCard is accepted. You can also manage your account online and are not responsible for charges you did not make.

Each of these options may provide better protection to travelers than a debit card.

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