When you travel there are three main options available to you for purchasing something, they are the same three options you have when your not travelling; cash, debit card, and credit card.
There are benefits and drawbacks to each one of these – I’ll do my best to help you decide whether a travel credit card really is worth the time and effort needed to get one.
When researching into credits card options it can be very daunting, especially if you have never needed or used one before. To get your bearings I really recommend checking out MoneySupermarket – they have a great way of simpifying financial gibberish into something us mortals can understand! As well as MoneySupermarket, it is a good idea to read about other people’s experiences and recommendations when it comes to choosing how to manage their finances on the road. Your choice will no doubt vary with what type of travelling you plan on doing, so make sure to tailor your choice to your travel! I’ll be looking at it from a backpackers perspective, specifically; the ease of use, any associated costs and my final recommendation.
Cash is king, or is it? While it might initially seem like cash is the best way to go when backpacking, there are a few things to consider. First of all, depending on where you are, it’s not always straight forward to find a reasonable deal – you can all to often be left with that gutsy feeling of being ripped off. Yes you can get currency before you leave, but if you’re on the road for months and visiting just a handful of countries, it would be silly to pack thousands of pounds into your backpack! Furthermore you are nearly always going to end up with left over currency, which isn’t always easy to get rid of. USD are widely accepted everywhere, but the Cambodian riel isn’t such an easy sell. Notes and coins are straightforward and you know they will be accepted wherever you go (as long as you have the right currency), that is a big bonus – no one wants to be in the middle of the Costa Rican rainforest asking the question “do you take MasterCard?”. Always ensuring you have a handful of dollars or local currency is the ideal when backpacking.
The first question to ask yourself is whether you want to make the majority of purchases with your card, or by withdrawing cash to then buy your goods. If you answer the former, then your best option would be to opt for a credit card. This isn’t me telling you to take your bog standard credit card in your backpack – if you do decide to take one of those, you’ll be stung with a non-sterling transaction fee of normally around 3% per purchase (trust me this would add up quickly). On top of that, some really bad highstreet credit cards will then charge an additional £1 – £1.50 every time you purchase something. So you purchase something for £5 but you’ll be charged £6.65, shocking.
Get round this by opting for a specialist travel credit card. Personally, I have opted for a Creation card as they offer no fees on purchases worldwide – just make sure you pay it off in full before the date on your statement. It also offers you free cash withdrawal, though this doesn’t quite match the debit card options as you are charged 12.9% APR. So it works out at about £1/month for each £100 withdrawn (if you get this APR). Ideally, you login to your online banking with them and pay it off immediately, or just as soon as you can. This will mean you pay almost nothing for your cash withdrawal.
Credit cards also offer you cover you wouldn’t get with a debit. Any purchases from £100 to £30,000 will be covered, meaning the credit card company’s liable along with the retailer if anything goes wrong. This is solely a credit card benefit and one not to be overlooked.
Hopefully this has helped you get an understanding of what is available and some of the pros/cons. If you have any advice, please comment below – if it’s good I’ll add it.