Wednesday, December 26, 2007

Credit Cards are better for travelling

Many people might disagree with that statement. But the truth is when you are travelling you're better off using a credit card. Maybe it's not so bad if you don't leave the US to only use a debit card, but if you travel at all internationally be prepared and take a credit card.

First you'll need one for surcharges on any hotel room. Now you can use a debit card but there will be a hold of maybe $100-$500 on your account because of it. Think not? It happens. And often these charges are not released for a few days. If you are an extreme budgeter this could cause your checks to bounce or payments to not clear. We're not extreme budgeters but I prefer not to tie up my cash.

Second the exchange rate on the credit card for foreign currency is better than what a bank will give you. I've tested it out and the credit card usually gives you 1-2% above the going day rate, but the bank usually charges you about 2-3%. And it does add up.

But what about carrying cash? Well sure it's nice to carry some cash, and absolutely necessary when travelling around the countryside of foreign countries. They don't use credit cards or debit cards. However, at that point you are better off going into a bank and exchanging US traveller's cheques than finding an ATM. We've been in the countryside of Asia and if they don't take credit or debit, ATM locations are just as bad.

Third, and what happened to us on our most current trip, if you buy tickets for a show or entertainment and it's cancelled, it's better on a credit card. You'll have an easier time disputing charges and getting refunds. We were told so by the people in the booth, that using a credit card would make the process faster, plus as foreigners we'd have protections in case the ticket booth wanted to charge us fees anyway for a show we never saw.

So perhaps a credit card isn't for everyone. However, I would not step foot of US soil and not take one. I've found it extremely useful, and easier to track my spending. As such, I have to go an reconcile our spending for our trip tomorrow.

Perhaps other avid travellers can share their experiences and debate whether they use a debit card or credit card. Most of our friends who travel extensively only use Credit Cards.

11 comments:

I'm Grace. said...

I agree. Capital One (which is normally NOT one of the better credit cards) is good for foreign travelling because they don't charge any handling fees for dealing with foreign currency. But one should avoid American Express. I was in Italy last year with an American Express gift card given to me by my sister. I had a hard time using it--hoteliers and shopkeepers were apologetic but said that their fees for accepting American Express were so high, they always avoided taking the card if they could.

Living Almost Large said...

Actually I use AmEx because the card I have has no fees. But not all do, depends on the card. I've been very stuck sometimes on foreign charges, I can't imagine arguing over a debit card charge. The money would be gone.

Boomer said...

I use a Mastercard/Visa check/debit card. Works the same as a charge card and I have used it internationally. No holds are placed on my checking account ever. Only the exact amount I 'charge' is debited. Here's the link:
http://www.usa.visa.com/personal/cards/debit/index.html?it=c|/personal/|Check%20Card
I get rewards, identity theft protection, lost or stolen card protection: yada, yada, yada. The only difference is (and a BIG difference I might add) is that I don't go into any debt using this form of payment. If I don't have the money, I don't buy anything. I don't wait till the end of the month to pay my bill. I pay for it right there and then. I don't bet my life on future earnings. I don't gamble my life on a 30 day time frame. I buy airline tickets, rent hotel rooms, car rentals etc. and pay for it right there and then. Period.
PS: someone gave me an American Express gift card also. Couldn't buy a dinner with it......useless....unless I went to a store and bought useless stuff!
What form of payment people use is personal. There is no best/worst way. You have to use what works for you. In the 'old' times, I'd charge with full intention to pay when bill was due but SOMETHING usually comes up and I choose not to live that way anymore.

Living Almost Large said...

Actually I've tried it and checked out with my bank, Boomie, and yep there is a hold. $100 for travelling internationally. I specifically wanted to see what would happen so I tried it.

I also asked the hotel how much would be held and the answer was $500.

Maybe it's bank specific for you, but personally I have DONE it recently within the past week. When was the last time internationally you tried and used your debit card?

This is my own personal experience, which you may dispute, but I have no reason to lie. This is what happened.

I also did not use my PIN number but tried running it as a credit card. It still withheld overage of $100 extra on the one specific charge I made. I wanted to test out my theories on this trip.

Our current roomie has lived on 3 different continents and visited pretty everything but antartica. He's had the same experience we've had using a debit card. He's been to Pakistan, lived in Malaysia, Singapore, visited Africa, hiked Machu Pichu, backpacked in mexico, etc. So it's not a solo experience.

I decided this was an important test of finances so I decided to try it.

As for me, if I haven't got the money it's not bought. I know what my guidelines are and that's it. But heck I've never had a spending problem, it's like being an alcoholic. You, Boomie, can never have a credit card because you've abused it. And as such should never ever touch one again.

But should everyone in the world stop drinking because you've had a problem? No. Some people can honestly have 1 beer or 1 cup of wine. Some people can honestly use credit cards. You keep on preaching about credit card overage. But it hasn't happened yet to me and I'm not yet 30 and have used CC for over 15+ years. I think that speaks volumes over my responsibility in this area.

My issues with debt has never been spending but always been student loans.

Living Almost Large said...

And I have to add I hate my bank. So it could be bank specific because my bank has TONS of stupid, irritating, rules about EVERYTHING. You can't do this or that, without being charge a fee up the waazooo. Ugh. I hate them so much. If only my mortgage wasn't with them.

But seriously they suck and it's possible I got stuck with a really crappy bank (something I consider all the time).

Boomer said...

Dear LAL, In 2005 I went to Paris. In 2006&7 I went to Italy. All on my check card. Maybe it is the bank. I've never had a hold on it.
I never abused credit. When your life runs smoothly, so does your world of credit. But get sick or lose a job, then you find out what a life of debt is really like. After 20 years DH lost his job. Couldn't get another for almost 3 years. That was back when the dot com disaster struck. Couldn't even get a job pumping gas. I never earned enough to carry the both of us. Liquidated over 15 years of investing quickly.
Think it can't happen to you? Yeah, you're only 30. I was 50 when it happened. Sometimes the best laid plans can't help us.
Such is life.
What I do notice about the check card is that if I charge lets say, $75, I do see a double charge, one is for the $75 and another is a one day hold of $75, so technically $150 is held. Is that what you are talking about? For me, it's just a one day hold and it doesn't bother me. I do know also if I rent a car, they will hold $500 BUT that is only in my area. Same for gas-if I use the credit machine connected to the pump, $100 is held. But if I pay the cashier just the exact amount is charged.
Either way, this is what works best for me. I'm happy with the service. It gets the job done.

Boomer said...

correction: I was 32 the first time I erred with credit. I was debt free for 15 years afterwards BUT succummbed again when I was 47. I thought I was more stable. WRONG! DH lost his job 3 years later. Debt and I just don't belong together.

Living Almost Large said...

Boomie, you obviously never used a credit card like a check card. You never spent money you already have. When I spend money it's on a credit card it's already spent in the checking account, it just happens to be gone on the credit card.

Hence I've never had a problem. The money is literally not there. I will never have a problem with credit cards. Why? Because I use it like a debit card, if I haven't got cash to pay for it, then I can't afford it. I pay my credit cards the moment the statement hits, not waiting for it to come.

I know to the day my statement hits and whammo it's gone.

You lived beyond your means for years. Why? Because in 3 years your husband could have worked at some job and your lifestyle should have been scaled back. That's what Dave Ramsey preaches. That you take ANY job and scale back to very hard circumstances. He says that if you aren't working after 1 month something is wrong. If you are such a debt fanatic, you'd have listened to him.

Now, why would we have spent 3 years looking for a job? How could he have not gotten a job pumping gas? Delivering papers? Waiting tables? Being a janitor? Trust me there are always jobs. Driving a cab, being a barber, cleaning homes, watching children. All these things are done without an education. My immigrant parents and in-laws have done them all.

I know for a fact if we lost our jobs tomorrow DH and I would be hitting the pavement looking for any job. We'd go to temp agencies, cleaning services, why were you too proud to get any sort of work? I know delivering papers pays pretty well. I also know that cleaning up offices I can definitely get that job.

So I would never be unemployed for 3 years. I think if you wrote this on most people's blogs they'd question why the layoff for 3 years? They would suggest the same things I did. Go to LLNOE and say you were unemployed for 3 years and they would be on you like a pack of dogs. Questioning why.

And if you had worked, potentially you would not have needed to liquidate so quickly or so much. I also know that scaling back a lot quickly instead of expecting a job to come is important. But if you have $5k in expenses but pull in $3k then you only need $2k from savings.

And as for us we easily live on one income now. In the future all of my earnings is gravy. At 28, we've already learned never plan on having more income. We bought an affordable home, we have the same cars, we don't spend money foolishly. Were you saving about 35% of your income at our ages? Paying about 20% in student tuition? That's what it's like for us.

We're very reasonble people. I don't think you had the same plans we did at our age. You never planned on losing one income, we have always planned on only having one income with the extra being gravy.

You bought a home on the higher income, we bought the home on the lower income. We know that people can get sick, disabled, and lose a job. Already lost a job 3x before the age of 30! But we didn't go into credit card debt at all. Hmm...funny huh?

We have disability short and long term. We don't have life insurance, except through the compnay. And we have only enough money to last 6 - 12 month in job loss. But we're young and building. I have run the numbers by 50 if we lost a job we could retire. In 5 years we should have enough to last us 5-10 years in taxable accounts if we lost a job, became disabled, or died.

So can you see the difference in planning? But the reality is we'd never go 3 years without a job.

Boomer said...

You know, LAL, I'm not gonna get in a spat with you. My DH was an top executive at Walt Disney Imagineering! Trust me: NO ONE WOULD GIVE HIM A JOB PUMPING GAS, DELIVERING PAPERS OR A PIZZA!!!! They would laugh at him.
You have your own life. I have mine. Don't throw a stone until you've walked in another person's shoes. Everyone can talk all they want until they have actually lived it.
Anyway, DH and I are multi millionaires once again. I made a promise to God that if He restored our lives, I'd never use debt again.
Live and learn.
Dave Ramsey can kiss my butt. He isn't GOD.

Boomer said...

Plus we had 2 daughters in college at the time. You have no idea how the other classmates taunted my children when they had to leave the dormitory and live with a family member just to stay in school. They made fun of them.
I only paid $135,000 for the home I was living in. We didn't live off the high hog. And we weren't young anymore. I was fired because of my age, which in turn I sued the company and won for age descrimination. You have absolutely no idea what life is really like.
I hope to God you never live a life I did.

Living Almost Large said...

No but Dave Ramsey went to Bankruptcy, so I guess he has some ideas about being broke. I think it really depends.

I notice you don't like to listen to people preaching an unusual mindset. You were upset at the millionaire mommy next door for preaching renting over buying.

But she does it successfully. And still is a millionaire. And they don't work.

I just wondered about the working. I do believe it is an age thing and an ego thing. Why not temp agencies? Or using 3 years to retool and get another career? Accordingly wasn't your husband younger at the time? In his 40s? Was he not given a severance package?

DH's VP when fired was given 2 year severance package for it. He found another job in less than 1 year. He's tried to lure DH back.

So I guess it's biased. DH's MBA professors, all have been laid off and found other jobs.

Was it because you didn't want to move either?

You sound like you have to be old to be laid off. We've done it 3 times before 30. And realize it's a way of life. But it's a different generation and mindset to realize this.

My mom was horrified by the way each time. She's only worked for 1 place her whole life.