The Summer Olympics in Paris. Cruises in the Caribbean and Mediterranean. Trending destinations in Asia and Central America.
This year, Americans are traveling to all these places and more in what may be another record year for international travel. If you’re heading abroad, when and where should you use – and not use debit cards?
Tropical Financial Credit Union experts warn that using your debit card outside the United States carries serious risks. We also highly recommend you always carry additional cards as a backup.
Don’t be surprised when your debit card is declined. Because your payment comes directly from your checking or savings account, it is handled differently than a credit card. If your hotel room or meal charge is not approved, you will have to come up with cash or produce a credit card. Additionally, overseas merchant purchases have a tendency to be declined more often using a debit card than using a credit card.
It can be more expensive to use a debit card. Be prepared to pay a 3% fee if you use a debit card issued by some of the nation’s largest banks, according to a recent survey. By comparison, the same institutions charge 2% on credit card charges, according to a 2023 Bankrate survey.
The same applies to ATM withdrawals. Some of the largest institutions have a flat fee of $2.50 to $5 for each debit card transaction and most charge 3% of the amount withdrawn. You could pay the foreign bank a separate fee for using its ATM.
The protections against fraud are less on a debit card than on a credit card, warns Experian. By federal law, you are liable for:
- $0 if you report your debit card lost or stolen before it was used to make unauthorized transactions
- $50 if you report the card lost or stolen within two business days of learning of the card’s loss or theft
- $500 for unauthorized transactions when the debit card is reported lost or stolen debit card more than two business days and within 60 days after unauthorized transactions appear on your bank statement
- An unlimited amount if you wait more than 60 days to report the fraudulent transactions
By comparison, liability for an unauthorized credit card charge is limited to $50 by federal law. However, many cards offer zero liability, according to Forbes Advisor. To protect your rights, you must immediately file a claim after discovering an unauthorized use.
To decide when to use a credit or debit card, read the fee schedule on your checking account and the credit cards you plan to use most often. You can find this information on their websites or by chatting with a personal banker. Along with questions about purchase and ATM charges, ask about the exchange rate for each. You may find that the credit card rate is better.