Are you preparing to travel overseas? One thing you’ll need to figure out is how you’ll access your money while abroad. Some travelers make the mistake of assuming that the financial set up they have at home will work fine in other countries. Unfortunately, that is not often the case. Here’s a closer look at why you should compare debit cards before traveling overseas, how to do so, and our top picks.
Before we start our dive into debit cards for traveling abroad, consider getting a travel credit card. They are typically safer and you can earn hundreds of dollars in rewards. One big benefit is it’s easier to dispute a foreign credit card charge than a debit card. Credit cards let you review your purchases before paying your bill. Debit cards allow businesses to withdraw funds directly from your account. It’s harder to dispute payments when they already have your money.
Why should you compare debit cards for traveling overseas?
Here are the top seven reasons all debit cards are not created equal when it comes to international travel.
1. Domestic vs international travel
Some debit cards aren’t designed to be used outside of the country. For those that aren’t, you may repeatedly experience declined transactions because the company suspects fraud. No matter how many times you call in to explain that you are overseas, some banks won’t be able to help you properly, which will be a continuous cause of frustration. Debit cards from smaller banks or credit unions can have this problem.
2. ATM fees
ATM fees can add up quick. When traveling, you don’t want to carry too much money around with you for security reasons but also don’t want to pay a bunch of fees to take out small amounts frequently.
Being so, you’ll need a card that makes it easy and affordable to access your money. There are two types of ATM fees; ATM transaction fees and out-of-network ATM fees. It’s best if you don’t have to pay either!
Note: Financial institutions that are part of the Global ATM Alliance allow you to use international ATMs without additional fees.
3. Foreign purchase transaction fees
Another red flag to look out for is a debit card that charges foreign transaction fees. A foreign transaction fee is an amount that is charged any time you use your card outside of your home country or with a merchant who charges in a foreign currency. If you are using your debit card to make purchases throughout your trip, these fees can add up quickly.
4. Currency conversion fees
Your bank may also charge a conversion fee when you make a purchase in another currency and the bank has to convert it to USD. The fee can be per conversion and/or a conversion rate that is lower than the actual rate, costing you more.
5. Security and fraud protection
Next, it’s important to choose a card that offers increased protection against fraud such as an online security program, microchip technology, and/or zero liability. You are at greater risk when outside your home country so want to prevent your card from getting compromised. Further, ensure you won’t be held responsible for fraudulent charges.
6. Extra features
When you choose a card designed for travel, you may be able to take advantage of additional benefits such as travel insurance, rental car insurance, TSA Global Entry, etc. Standard debit cards designed for everyday use don’t usually include these features.
7. Online access
Lastly, when you’re overseas, you won’t be able to walk into a branch to manage your money. Being so, it’s important you can manage your account online via a website and/or mobile app. The more tech-savvy the company, the better. Look for mobile apps and websites that allow you to view transactions, deposit checks, transfer money, pay bills, and more.
Shop around before taking off
For these reasons, it’s important to shop around for a debit card that is designed for traveling overseas. Imagine that you just landed in Italy and you go to dinner which ends up costing $85 Euro. At today’s exchange rate that should be about $96 USD.
If you have a debit card with a Bank of America Advantage Banking checking account and use it to pay, you will be charged an international transaction fee which is equal to 3% of the amount, so $2.88 in this case. If you go to a non-Bank of America ATM to withdraw the money, you will pay $5.00 per withdrawal plus any fee the ATM itself charges.
After a week on vacation, if you made 10 similar transactions, you’d pay $28.80. If you withdrew cash from non-Bank of America ATMs 10 times, you’d pay $50. On the other hand, if you have the Charles Schwab High Yield Investor Checking Account, you wouldn’t have to worry about any fees and could spend that money on things you want.
So when comparing cards, you will want to consider the above seven features.
Top debit cards for traveling overseas
Now, let’s take a look at some of the debit cards that we recommend when traveling overseas.
Aspiration enables you to use your debit card at any ATM in the world, free of charge. It doesn’t charge ATM fees and reimburses you for the fees charged by other banks. Pay no ATM, out-of-network ATM, foreign transaction, overdraft, or nonsufficient funds fees. Plus, open an account with as little as $10 and manage it easily online through the website or app.
NBKC Personal Account
This account has no monthly fee, no ATM transaction fee, no out-of-network ATM fee, and no overdraft of nonsufficient funds fees. Additionally, NBKC will refund up to $12 per month for ATMs fees that banks charge you. The account also offers 1.01% APY and the ability to deposit checks through a smartphone. Open it with just $5.
Capital One 360 Account
You can use the Capital One 360 debit card as often as you want while abroad as it does not charge any foreign transaction fees, ATM fees, or monthly maintenance fees. You will also earn interest just by having money in the account. This is an online bank account so offers a full lineup of management options on the website and mobile app.
Charles Schwab Bank High Yield Investor Checking Account
The Charles Schwab account reimburses you for ATM fees charged by other networks worldwide. Additionally, it doesn’t charge any foreign transaction fees or out-of-network ATM fees. You will need $1,000 to open this account but there is no monthly fee or minimum required balance.
Compare more checking accounts with debit cards below.
Travel debit cards vs. credit cards
What is the difference between a credit card and debit card and how do they compare? Here’s a closer look.
When you use a debit card, the amount you pay is deducted from the money you have in your account.
Here is a list of the benefits and the drawbacks to consider when using a debit card for travel.
- You can only spend money you have which helps to reduce overspending.
- Some cards allow you to earn interest on your balance.
- You don’t pay interest.
- It doesn’t help you build credit.
- It’s harder to dispute charges.
- You can only spend what you have.
- Often no rewards for spending.
When you use a credit card, you are borrowing money that you will repay later. If your balance carries over past a billing cycle, you will have to pay interest on the amount borrowed.
Here is a list of the benefits and the drawbacks to consider when using a credit card for travel.
- Can help you to pay for something now and pay it back later.
- May come with rewards for your spending (miles, points, cash back, etc.).
- Helps you to build credit.
- An added layer of protection from billing mistakes and fraudulent charges.
- If you don’t pay off the balance in full by the end of the billing cycle, you will begin to pay interest on the balance.
- May cause you to rack up more debt than you can afford.
A combination of debit and credit cards can be a good solution to get the best of both worlds. However, credit cards should be used in a controlled manner in order to reap the rewards without suffering the consequences of unbridled spending.
Find the right debit card for your overseas travels
Ready to find the right card for you? Now you have all the knowledge you need to make an informed decision. Compare the cards below to find the best one for your needs!