BBB tips for travel: Debit or credit?
Summer travel involves multiple choices. Where to go? What to do? Debit or credit? Choosing how to pay for your trip can help protect you from unauthorized charges and card skimming scams. The BBB has advice about whether it is better to pay for your travel expenses using a credit card or a debit card.
When you use your debit card, the money is automatically withdrawn from your checking account which limits your available cash. Whereas, when you make a purchase with your credit card, it reduces your available credit limit.
Most credit issuers have zero liability policies which will protect you from unauthorized charges, fraudulent activity or orders for products and services that you did not receive. Debit cards typically have limited liability policies which will require you to cover a portion of the lost funds.
“Debit cards are a convenient way to control spending since the money comes out of your checking account,” said BBB President Tom Bartholomy. “However, if you have unauthorized charges or buy souvenirs that you can’t return, you will have more difficulty getting your money back than you would if you had used a credit card.”
If you are traveling, the BBB recommends using a credit card, instead of a debit card.
• Shopping: Buy souvenirs on a credit card. Vendors are likely seasonal and could be gone in a month or two. If you bought something that broke, you would not be able to return it if you can’t find the vendor. When you are traveling, you may not be paying through secure payment terminals and could be at risk of having your payment information compromised by shared wireless networks, unsecure internet connections, data breaches and hackers.
• Gas: Pay for gas on a credit card. A card skimmer can easily be slipped over an actual card reader at pay-at-the-pump gas station terminals. When a scammer uses a skimmer with a wireless camera, they can capture your debit card number and your PIN to clean out your bank account in a matter of minutes.
• Dining and Drinking: Pay by credit card. Bars often store customer payment information in their computer ordering systems until the bill is paid in full and restaurants usually process payments at central terminals. “Once your card is out of your sight, it is at risk of falling into the wrong hands,” added Bartholomy. “Your card can get copied and used without your permission.”
• Excursions: If you have to pre-pay for activities, you should charge the cost to a credit card. If the company goes out of business before you go on your trip, in most cases, you will get your money back. “Companies that are here today, can be gone tomorrow,” said Bartholomy.
• Hotels: When checking into hotels, use a credit card. Hotels swipe your credit card to see if you have the available funds, but hotels place a hold on the total amount of your hotel stay plus estimated incidental expenses when you use your debit card. When the charge posts after you check out, the amount held on your debit card may take a few days to drop off and you could find yourself with insufficient funds during your trip.
• Airline tickets: Buy airline tickets on a credit card, instead of a debit card. Many credit cards offer travel insurance protection or frequent flyer miles when you use your credit card.
• Getting cash: This is the only time when the BBB recommends using your debit card. The fees you will pay will be lower if you get cash from your debit card, than to get it from your credit card.
The BBB also recommends that you take these steps to protect your credit and debit cards when you travel:
1. If you are planning to travel abroad, you should notify your credit card company and bank to tell them where you will be traveling or they could freeze your account thinking your card has been stolen.
2. Write your card numbers down before you leave home and the telephone numbers of your credit card companies and your bank. If your cards are lost or stolen, you will have the information to cancel them quickly.
3. Check your credit card and bank statements when you return to make sure there are no unauthorized charges.
Regardless of payment method, you should check businesses out on bbb.org before making reservations.