5 reasons to use a credit card when you travel

11 March 2020 by National Bank
travel credit card

Whether it’s for security, convenience or just out of habit, a credit card is a traveller’s best friend. On top of making it easier to make purchases abroad and helping you get ready for your trip, most credit cards offer a gamut of advantages that make them a preferred way to pay.

Here are five reasons why every well-informed traveller should set out with a good credit card.

1. Take advantage of complete travel and rental insurance

If you take more than one trip per year, having a credit card that includes travel insurance might be a good idea, especially in case of a trip being cancelled or interrupted, late flights, baggage or medical issues.

Do the math: is the annual fee for the card less than what you would spend on private coverage? If so, the choice is simple, a credit card with travel insurance will save you time and money in your planning process.

Some credit cards also offer insurance on car rentals. A great way to save if you usually rent a car when you travel.

2. Get a better exchange rate

Some companies don’t charge any fees at all for foreign currency conversion. The norm is still between 2.5% and 3% per transaction though, so don’t forget to look into your card’s policies before you leave. A small detail that, in the end, will make a big difference for your wallet!

3. Take advantage of privileged services and rewards programs

Many travel credit cards offer great rewards programs. Some give the holder up to 2% of the value of their purchases in either points or cash. Points can then be exchanged for travel discounts, gift cards and even rebates on banking products.

Another positive is the opportunity to benefit from insurance and extended warrantees on purchases. Imagine, for example, you bought a pair of sunglasses during a trip to Europe. By putting the purchase on your credit card you’d be insuring it against theft and damage, as well as tripling the life of the seller’s warranty. All this while collecting up to 2% of its value. These savings might seem small at first glance, but in the end they pay off!

If you’re a frequent flyer, you’ll appreciate the reimbursement of parking, baggage check and seat selection fees that comes with certain travel cards, as well as being able to access private airport lounges. Some companies even offer the equivalent of a free hotel stay or plane ticket when you sign up.

4. Gain more flexibility in your transactions

These days, booking flights, shuttles, hotels and activities abroad happens almost exclusively online, sometimes months in advance.

This makes having a credit card pretty much essential for anyone planning a trip. Using your card to book will allow you to leave with greater peace of mind, knowing that you won’t have to compromise on the quality of your lodgings or activities once you arrive. It’s a must for making reservations, but a nice asset for everyday spending, too.

With a higher credit limit, a credit card can also give you greater financial freedom. You won’t have to worry about whether funds are being held in case of pre-authorizations, and you’ll be more easily able to deal with any unexpected expenses that come up during your trip. It’s a payment method that’s both flexible and permissive.

5. Be ready for anything

Debit card, cash, credit card, what’s best to use, and in what circumstances? Unsurprisingly, cash is still, as a general rule, the easiest way to cover everyday purchases overseas.

You should only use your debit card for occasional ATM withdrawals. Avoid taking out smaller amounts (service fees will be high) and try to choose ATMs in cities, as they charge fewer fees than those located in airports.

Finally, your credit card is still the best all-purpose payment method, accepted in far more places abroad than your debit card.

Use your credit card for important expenses like activities and meals. But if you want to make withdrawals on your card, be aware that on top of transaction fees ($3 to $5) and conversion fees (1.8% to 5%), interest will be calculated from the first day.

To avoid these fees, pay your balance in its entirety and make a deposit on your card to bring you up to a positive balance. Once you’re away, make withdrawals only from bank machines that are part of the Cirrus or Plus network. Certain companies don’t allow this type of transaction, so speak to your financial institution before you go.

It’s also recommended to leave for a trip with more than one card, to avoid finding yourself without any resources in case of loss, theft or a blocked account. Even informed travellers who notify their banks before they leave aren’t safe from having their accounts blocked when they make their first transaction abroad.

In addition, payment methods and technology can vary depending on the country. Your card could be refused. It’s always a good idea to have a second credit card, a second debit card, and a little bit of cash to make sure you have all your bases covered.

Finally, if your credit card is cloned while you’re making a purchase in a store, most financial institutions will not hold you responsible for fraudulent transactions carried out in your name. The amount lost will be refunded in full, with or without fees, soon after it’s reported.

Bonus reason: saner group travel

With a credit card, managing group bills is easy. Pay with your card without thinking twice about whose turn it is, then check your statements and balance the expenses when you get home. It’ll save you lots of time and headaches.

Some companies also show purchases in Canadian dollars as well as the currency of the purchase. A little detail that can sometimes be helpful in better visualizing and writing up your expenses.

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