Short answer: for most international trips, use a credit card with no foreign transaction fees for purchases and hotel bookings, because it has stronger fraud protection and doesn’t tie up your own cash with deposits. Bring a debit card (or a travel card like Wise or Revolut) for ATM withdrawals and local cash. Always pay in the local currency, and carry a backup card.
Debit or credit? It sounds like a small question until your card gets frozen in Lisbon or a hotel puts a $300 hold on your checking account. Both cards have their place on a trip. Here’s how we use each one.
Debit cards for travel
A debit card takes money straight from your bank account. That’s both its best feature and its biggest weakness.
The good stuff:
- Built-in budget. You can only spend what’s in your account, which keeps vacation splurges in check.
- No interest. It’s your own money, so there’s nothing to pay back.
- Easy cash. Debit cards are the simplest way to get local currency from an ATM for tips, markets and places that don’t take cards. ATM exchange rates are usually much better than airport exchange counters.
The not-so-good stuff:
- Weaker fraud protection. If someone steals your card details, the money leaves your account right away, and getting it back can take a while.
- Fees. Many banks charge foreign transaction fees and ATM fees that add up fast.
- Holds. Hotels and car rental companies often put a big temporary hold on your card, which can lock up hundreds of dollars of your actual money.
- Overdraft risk if you lose track of your spending.
Our personal favorites are Wise and Revolut. Both have great exchange rates and give you a virtual card right away, so you can start using it the same day. You can order a physical card too.
Credit cards for travel
For most purchases abroad, a credit card is the stronger choice.
The good stuff:
- Better fraud protection. If someone uses your card, it’s the bank’s money on the line while the issue gets sorted, not yours.
- Rewards. Many travel cards earn cash back, points or miles that can pay for future trips.
- Built-in perks. Some cards include travel insurance, rental car coverage and trip cancellation protection.
- Emergency backup. Access to money beyond what’s in your bank account when something goes wrong.
- Holds don’t touch your cash. A hotel deposit on a credit card uses your credit limit, not your checking account.
The not-so-good stuff:
- Interest if you don’t pay the full balance every month.
- Easier to overspend, since the bill comes later.
- Foreign transaction fees on some cards, often 1% to 3% per purchase.
- Not accepted everywhere. Small shops and remote areas may be cash only. And many places take Visa and Mastercard but not American Express or Diners Club, so always carry one of the big two.
How to choose a travel credit card
- No foreign transaction fees. This is the big one, especially on longer trips.
- Good exchange rates. Cards on the Visa and Mastercard networks generally convert at competitive rates. For debit, we like Wise and Revolut.
- Chip and PIN. Standard in Europe and many other places. Some machines won’t take magnetic-stripe-only cards.
- Rewards that match how you spend. Eat out a lot? Look for dining rewards. Fly a lot? Miles might matter more.
- Annual fee vs. perks. Premium cards can be worth the fee for frequent travelers. For a once-a-year trip, often not.
- Read the fine print on reward restrictions and exactly which travel protections are included.
Always pay in the local currency
When a card machine or ATM abroad asks whether you want to pay in your home currency, say no. It’s called dynamic currency conversion, and the exchange rate is usually worse than your card’s own rate. Choose the local currency every time.
Before you leave
- Check your bank’s travel settings. Some banks still want a travel notice, others don’t. A quick look in the app can save you from a frozen card at the worst moment.
- Bring a backup card and keep it separate from your main wallet.
- Carry some local cash for places that don’t take cards, especially in rural areas and small family-run spots.
- Know your PIN. In much of Europe, payments above the contactless limit (often around €50) ask for a PIN. If your US credit card doesn’t have one, set one up before you go.
Paying for your hotel
Hotels are where the card choice matters most. Many hotels put a hold on your card for incidentals, so a credit card keeps your bank balance free. And when you book, compare prices first: the same room can cost different amounts on different booking sites because of promotions and partnerships.
That’s what we built Hotel Ninja for. It’s a free Chrome extension that shows the final price for the same room on Booking.com, Expedia, Hotels.com, Agoda and other supported sites, with taxes and fees included. It supports multiple currencies, too, so you’re comparing like with like. For more ways to save, see our hotel booking hacks.
Frequently asked questions
Is it better to use a debit or credit card abroad?
For most purchases and hotel bookings, a credit card with no foreign transaction fees is better because of stronger fraud protection and because deposits don’t lock up your own money. A debit card is best for ATM cash withdrawals.
Should I pay in local currency or my home currency?
Local currency. If you choose your home currency, the merchant or ATM converts it for you, usually at a worse rate than your card would give you.
Can I use a debit card to pay for a hotel?
Usually yes, but many hotels place a temporary hold for incidentals, which takes real money out of your available balance until it’s released. A credit card avoids that.
Do I need to tell my bank I’m traveling?
Some banks still ask for a travel notice, while others detect travel automatically. Check your bank’s app or website before you go so your card doesn’t get blocked.
