Summer is here and travel plans are likely on your mind. But, before you kick off your big road trip or beach escape, you may have to travel for business or other personal needs. While you’re away, you’ll have to decide on a means of payment for hotel stays, transportation, meals, and more. Most of us will choose between credit or debit cards. 

The Pitfalls of Traveling with a Debit Card 

There are lots of different opinions when it comes to debit cards. On one hand, debit cards allow for a built-in budget control because you’re limited to your checking account balance. On the other hand, debit cards have less attractive fraud protections, which can pose issues for business or personal travel expenses.  

To start, your debit card is not backed by the bank, but by you. So, any debit card fraud you experience would mean the loss or theft of your money—even if you get it back eventually, you may never recover the full amount. This could mean your funds are not actually there when you need them, which would be a very bad thing to learn when you’re traveling and depending on your debit card.  

Also, even the money that you do have may not be available to you when traveling with a debit card. Most hotel or rental car companies will place a hold on your debit funds that would otherwise cover your trip. Such companies might even place holds on your funds for “little things,” such as excess mileage or hotel room incidentals. So, a significant amount of money in your checking account will not be available for you to use. If your trip results in holds against your funds, important auto-payments of recurring charges may not be made, generating late fees and even negative reports on your credit file. 

The Pros of Traveling with Credit Cards 

It’s important to keep in mind that using a credit card means that you’re using the bank’s money, not your own. More specifically, you’re utilizing funds from a pre-set credit limit that was established when you applied for and opened the account. Most likely, your credit card limit is substantially higher than your trip expenses will be. Therefore, the holds placed by your hotel or rental car company are often irrelevant to the continued use of your credit card.  

Further, bringing a credit card on vacation is a much more secure insurance policy. If your card gets lost, stolen, or exposed to fraud on your trip, your bank can have a new card issued and in your wallet within 24 hours. You are much less likely to be sidelined on your vacation with a credit card rather than a debit card. Even better, you have no liability for fraud if someone steals your card number, so any charges made by a fraudster will not come back to haunt you. 

Beyond the perks of traveling with a credit card, they have personal financial benefits as well. Credit cards are a great means of building, rebuilding, and maintaining strong credit scores. Every credit scoring system will reward you for managing your credit card well by simply keeping balances low and paying bills on time.  

Remember that interest on credit cards is optional, so don’t worry about high rates that sometimes accompany credit card accounts. If you pay your card balance in full every month, you will incur no interest charge and your interest rate becomes immaterial. Credit card accounts are really the only credit product where interest payments are optional.