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Traveling doesn’t come cheap, and part of keeping your finances intact during vacation includes knowing the best way to pay for your purchases during your getaway. Should you primarily use cash, a debit card or a credit card?

Let’s take a look at the pros and cons of each choice so you can make an informed decision during your vacation.

Using cash on vacation

Cash may be going out of style, but it’s still the preferred method of payment for many travelers. 

Payment cards can be complicated when you’re far from home and you may not be familiar with the protocol of your financial institution and credit card company when it comes to using your debit card on foreign soil. Cash, on the other hand, works anywhere. It’s also easy to stick to a budget when you only have cash on you since there’s no way you can possibly overspend. Also, cash offers its own form of security by not leaving a digital trail. Finally, cash is easy to use to pay for small purchases when on vacation, such as food you may want to buy from a street vendor or a tip you may want to give the bellhop at your hotel.

On the flip side, cash is not the most convenient to lug around. You’ll also need to decide how much cash you need for your vacation before leaving home, as you may not find an ATM that’s connected to your credit union while on vacation. Finally, cash always carries a risk of loss or theft. Once it’s gone, there’s no way to get your funds back.

Using a debit card on vacation

If you’re like many Americans, your debit card is your go-to method of payment at all times. But, should it be your number-one choice while on vacation? 

First, let’s take a look at the good news. Your debit card rarely carries with it any surcharges or merchant fees, and the money comes directly out of your checking account, so there will be no surprise bills waiting for you when you get back home. Tracking your spending is easy, with account statements readily available on your financial institution’s website or app, and you can also link your account to any of a number of third-party payment apps, which work just like using a debit card. 

The bad news is, your debit card is not necessarily the prime choice for covering expenses while on vacation. First, it doesn’t come with robust purchase protection. This means, if you want to backtrack a purchase, you may not have any way of doing so. There are also no rewards offered for your purchases and your card may not be accepted at every vendor. 

Using credit cards on vacation

Credit cards are generally the recommended choice of payment method to use when traveling. Be sure to contact OC Federal if you are traveling with your OC Federal card out of a five zip code radiance of your zip code on file. You can call us or send a message through online banking. We can place a travel notice as far in advance as five years and can update or cancel them if plans change.

So, why use a credit card? First, credit cards offer convenience and unparalleled security. When making payments in a foreign country to vendors you’ve never encountered, the fraud protection on credit cards and the ability to dispute unauthorized charges make this payment method desirable and super-safe. Credit cards may also be necessary when booking a hotel stay or car rental. Also, many credit cards offer travel-related perks for purchases, which can include travel insurance, rental car coverage and access to airport lounges. Additionally, using a rewards credit card can earn you points, miles or cash back on your purchases. Finally, when traveling internationally, credit cards often provide competitive exchange rates compared to currency exchange kiosks. This can result in cost savings and more accurate budgeting. 

Unfortunately, credit card use does have some downsides for vacationers. When you’re away from your normal surroundings and routine, you’re likely more relaxed and chilled. This can easily translate into less willpower and less responsible money decisions. Using your credit card when vacationing can trigger overspending, leaving you with a nightmare bill to pay off when you return home. It’ll also cost you more, as you may have interest tacked on to your bill if you don’t pay it off before it’s due. Last, but certainly not least, some credit cards have foreign transaction fees, which can add up to a significant amount over the course of your trip.

Cash, debit or credit? It’s a tough decision, but with all the pros and cons of each choice laid out for you, you can make a responsible choice for your vacation.