Going On Vacation? Use Your Credit Card Instead of Your Debit Card

In a couple of weeks, my family and I are headed to New York to visit my husband's family. And we'll be leaving the debit card at home. Why? Because when traveling, no matter how much money you have in the bank, it is often a better idea to use a credit card when away from home. It is especially important to realize that debit card shortfalls mainly afflict debit and bank cards that do not also feature a credit card logo, such as Visa or MasterCard. Here's why:

Fraud protection

This is the biggie. Most debit cards still hold you accountable for every penny that is spent, even if it fraudulent. Credit cards, on the other hand, are different. You are only liable for $50 if you report a credit card as lost or stolen within the first 48 hours. But beware! After 48 hours your liability jumps to $500. Make sure you call immediately if credit card is lost or stolen.

Rentals

Most rental companies WILL NOT accept a debit card when you are trying to make a reservation. So, if you will need a car rental, a credit card is necessary.

Hold-ups

When you get gas or check into a hotel, many times you will receive a "hold" or "reserve" on funds. This means that the company actually "locks in" a certain amount more in order to ensure that the funds will go through. There are two transactions. The first is the reserve, perhaps $50. The second is the actual amount (the $35 it takes to fill up your tank). If you have a debit card, this hold can lock away funds for two or three days, leading to problems down the road.

Disputes

Finally, very few debit card issuers allow you to dispute purchases and get a refund. With credit cards, you can dispute purchases that did not arrive, or that ended up being in poor condition.

When traveling, it is in your best interest to bring a credit card. Keep track of it, and use it for reservations, gas and souvenirs. Keep your debit card for things like food.


Tags: credit card, personal finance, financial planning, finances,
financial goals, vacation credit card, debit card