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Should You Use a Credit Card or Cash on Vacation? | Credit Card News & Advice

Key Takeaways

  • You’ll be best prepared if you plan to use both cash and credit cards on vacation, as either payment type can function as a backup.
  • Consider your spending habits, destination and trip duration when choosing whether to use cash or credit cards as your primary method of payment on vacation.
  • Take steps to keep your cash and credit cards safe while traveling by dividing cash into multiple stashes and using tap to pay for credit cards.

Cash is king, but credit can offer greater security when you travel. Before you head out on vacation, make plans for whether you’ll pay for expenses such as meals, souvenirs and local transportation with cash or credit. Consider how you plan to spend, where you’re going and how flexible your money needs to be as you choose between cash or credit as your preferred payment method.

Pros and Cons of Using Cash on Vacation

Cash can offer flexibility and help you avoid fees, but it can be risky to carry on vacation.

According to Travis Cormier, chief operating officer of credit card rewards travel site 10xTravel, using cash largely depends on your destination, as you won’t always find vendors who take cards in every destination. “Consider the remoteness of where you’re going, as well,” Cormier says. “Many card transactions require the internet to process, so if you’re traveling somewhere like Egypt or Morocco where you’ll be out of the city centers, expect to need cash.”

Pros of Cash

  • Budgeting: When you pay in cash, it’s easy to keep up with spending because you can see how much is left every time you open your wallet.

  • Avoiding fees: You may have to pay a foreign transaction fee when you use a credit card, and some establishments charge a fee on top of that for you to use a credit card instead of cash or debit.

  • Flexibility: Cash works almost everywhere, especially if you’re leaving tips or buying food from a street vendor. You might have an easier time haggling with cash, too.

Cons of Cash

  • Theft or loss risk: Once cash is lost or stolen, there’s no way to recover it. Also, it could be dangerous to travel with all of the cash you need for your trip.

  • Planning required: You’ll need to plan ahead and get enough cash for your vacation just in case you can’t find an ATM that works with your bank.

  • Less acceptance: Although cash is often widely accepted, businesses that have gone cashless and only accept debit or credit cards are increasing. Hotels and car rental companies may require you to have a card on file even if you’re paying cash.

“The downside of paying with cash when traveling is that you have to carry around large sums of money with you, and you run the risk of misplacing it or theft,” says budgeting expert Andrea Woroch. She suggests carrying a debit or credit card as a backup to cash.

Cormier says using cash in countries with a volatile currency may eventually make your cash less valuable. “If you don’t use all the cash and you’re saving it for a future trip, it may not be worth as much next time you travel.”

Pros and Cons of Using Credit Cards on Vacation

Credit cards can offer greater protections than cash, but you may experience fees or issues with acceptance depending on where you’re traveling.

Pros of Credit Cards

  • Expense tracking: You can keep track of what you’ve spent by logging into your online account.

  • Rewards and benefits: Many credit cards earn cash back you can use to offset travel expenses, or others may earn points to use toward your next trip. Some may offer travel protections such as trip cancellation coverage, and your benefits may include travel perks such as airport lounge access.

  • Easy replacement: If your card is lost or stolen, it’s typically easy to lock your card with an app or phone call, remove fraudulent charges and get a new card sent to you. However, you should have a backup payment method to use while you wait to get a new card.

The security of credit cards can’t be understated. “If you lose your cash, then that money is gone,” says Cormier. “If you lose your card, it may be an inconvenience, but you can at least cancel it and get a new card reissued and you’re not liable for any unauthorized purchases on the card.”

Your card may also offer travel protections that can save you money and offer reassurance, says Spencer Howard, founder of points travel site Straight To The Points.

“Beyond earning points, miles or cash back, many credit cards come with a variety of travel benefits such as trip delay and cancellation protection and bag delay protection,” says Howard. “Delays and cancellations are stressful enough, so knowing that you can cover some necessary expenses provides a little peace of mind.”

Cons of Credit Cards

  • Foreign transaction fees: Some credit cards charge a fee for purchases made abroad or in foreign currency. However, there are numerous cards with no foreign transaction fees if you’d prefer not to pay this when you travel.

  • Unexpected declines: Credit card issuers use advanced algorithms to detect fraud, but may erroneously flag your account for fraud and not allow charges when you make purchases that don’t follow your usual pattern.

  • Acceptance issues: Although the major credit card issuers are widely accepted, there are exceptions. Discover and American Express are accepted at fewer locations than Visa and Mastercard, so you should bring a Visa or Mastercard as a backup.

How to Choose Between Cash or Credit Cards on Vacation

Choosing between cash or credit cards on vacation isn’t an either-or situation, as you should be prepared to use both. Consider your spending habits, the destination and how long you’re traveling.

You might prefer to primarily use credit cards but bring cash as a backup in case your cards are lost or compromised, a merchant doesn’t accept cards or you want to tip in cash. Alternatively, you might prefer cash but still bring a credit card or two along as a backup if you lose your cash, need to put a card on file for a hotel or rental car or encounter a cashless business.

Also think about the types of transactions you’ll make. Cash may be a good choice for small transactions such as meals or souvenirs, while a credit card is better for hotel accommodations or tours.

Consider the trustworthiness of where you’re spending money before you hand over cash. “If a merchant fails to provide the service or product you’ve purchased, using a credit card gives you the option to file a (dispute) so your bank can investigate,” says Howard, who notes if a merchant accepts credit cards, that’s always his preferred payment method.

Look ahead to your destination and understand whether you’ll need to convert your cash, how easy it is to access ATMs that connect to your bank and how widely your credit cards are accepted. Trip duration matters, too, as carrying enough cash to cover a long trip may not be practical.

“Travelers deciding on cash or cards for vacation spending need to consider the benefits of their card and the accessibility of card payments in the country they’re traveling to,” says Cormier. “Additionally, if you don’t get cash in advance, your bank may charge you a foreign ATM fee to get cash in a foreign country, and ATMs can set their own conversion rates that don’t match the market rates.”

Tips for Using Cash and Credit Cards on Vacation

A few things to keep in mind when spending on vacation:

  • Divvy up the cash. Keep cash safe by dividing it into stashes in multiple locations, such as in your wallet, money belt, hidden pocket and in your hotel safe. Only carry what you need for the day’s expenses and be discreet about handling cash in public.
  • Do your research. When exchanging currency, only visit reputable banks or currency exchange offices, and compare exchange rates to find the best place to convert your cash.
  • Avoid fees. Use a credit card that doesn’t charge foreign transaction fees.
  • Alert your bank before you leave. Some credit card issuers ask you to set up a travel notice to avoid having them errantly flag your account for fraud. You may be able to set up the notice online or by phone.
  • Shop like a local. If a merchant offers the option to pay with your home currency, decline it and pay with the local currency, as the exchange rate you’ll get from your card should be better than what’s available at the register.
  • Tap to pay when available. Whenever possible, use tap to pay with your phone or watch. It’s the most secure way to pay because you don’t need to pull out your wallet and it reduces the risk of card skimming and fraud.

“Rather than choose one or the other, consider utilizing cash and cards to be sure you’re fully covered,” says Cormier, who recommends taking out about $100 to $200 and planning ahead for foreign currency. “Most major U.S. banks can order cash for you for any country, but you’ll often need to reach out a few weeks before your trip for them to get it in time. If you need more cash, you can get more at your destination.”

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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