This is a guest blog post from Indigo Car Hire
Whether it was for business or pleasure, I have been travelling regularly for the last 20 years and I often get asked which credit card I use to get the best currency rates or usage fees. The short answer is that I do not use a credit card, never have! I use my debit card.
I have never liked the idea of paying interest on top of already inflated conversion rates. For me, not using a credit card is a choice. Many people these days do not have that choice to make as it has become much harder to qualify for the card’s you may want, especially with a large enough credit limit to cover the essentials when travelling. So why bother?
I have lost count of the amount of times people have told me I won’t be able to book a hotel or hire a car. The fact is, these are myths and I will explain more below. Please do not read this article and mis-understand that I am against credit cards. I’m not – for some they are a great asset and if managed properly can be very helpful. The purpose of this article is to explain that you do not need to have one to do the things that you want to do when travelling.
The first myth I would like to quash is that you need a credit card to book a hotel. You don’t! I have never been turned away from a hotel for only having a debit card, whether booking online or walking in off the street. Debit cards are widely accepted around the world, especially the visa and Mastercard types. Some cards like Solo, Switch or Lazer maybe less known in some countries, however.
What you need to be aware of is that some (not all) hotels will put a hold on your debit card, either for the cost of the room or for a security deposit until you check out and the final cost is charged. This holding deposit is frozen on your card, meaning no funds leave your account, but there needs to be enough in your current account to cover the amount. Once you check out and pay for the stay, it could take a little while for this ‘frozen’ amount to be released back to you – most of the time it is pretty instantaneous but I have known it take 7 days.
A common misconception and our next myth is that you cannot hire a car without a credit card. This is not the case – you can hire a car using a debit card in most countries around the world, you just need to know where to look.
Much like checking into a hotel, your rental car will have an excess/deposit, and this again is ‘frozen’ on your card until the vehicle is returned in an acceptable condition. Each rental supplier is different, and I have known this deposit amount to be as low as a tank of fuel (around £50-£80) or as much as £3,000 in some circumstances. If like me you don’t have £3,000 available to be frozen while trying to enjoy your trip, then you have a couple of options:
- Do your research ahead of time and try to find the suppliers with the lowest deposits. I realise that this isn’t always practical – especially if you are moving around a lot as you may not know when you will need the car- so booking ahead is difficult. But with this research or a conversation with your broker, you will at least know which suppliers are based in your intended location and their typical deposit amounts.
- Look into purchasing the additional insurance that the supplier will almost always try and shove down your throat. By taking their super or gold coverage this will reduce your excess liability, which will reduce your deposit amount down to zero in a lot of cases. This does come at a cost, but for short term rentals the additional daily fee may just be worth it.
Much like hotels, I have never found myself not being able to book a flight because I do not have a credit card – a debit card is all you need. Credit cards can be a benefit is when it comes to air-miles and other extras, however, which is what tends to draw people in.
During your flight, you may find yourself buying some duty free or even a simple meal deal. My tip is to always pay in local currency when prompted – if they convert it back in the GBP for you, you will be paying an inflated price. This brings us nicely onto…
Currency Exchange Rates
When it comes to the minefield of exchange rates, sometimes it is pure guess work. Is it better to exchange currency before leaving, use an ATM on arrival or simply pay for as much as you can on your debit card? For me, it’s the latter – and I will use my latest holiday to the Dominican Republic as an example.
My debit card of choice is a Monzo Mastercard – I signed up with them for the main reason of zero card charges when abroad. Before leaving, I checked with the various currency exchanges in the supermarket, with my travel agent and online with various outcomes – the best rate I found for the US dollar was 1.20…very poor!
I decided not to bother thinking I didn’t need much actual cash until we got to the airport and I was reminded by my better half that we needed some small bills for tips! So off to the counter in the airport I went, where I received the criminal rate of 1.06. Practically 1$ to the £. I was gutted – but luckily didn’t need to change much currency.
On arrival, the first thing I did was approach the shop for a couple of bottles of water and a few other bits for our transfer. Not really thinking about exchanges rates, I just swiped my card for the payment. One of the good things about my new bank account is the app that comes with it, so immediately there was a notification on my phone. You have just spent £3.60 in Punta Cana Airport. When clicking on this it gives more information on the transaction and the conversion rate – a massive 1.29.
So, by using my debit card, I was reducing the risk of losing cash, negating the need to carry anything but my phone by using ‘mobile pay’ and getting a better rate. Not just better than the criminal rate in the airport, but better than any of the exchange outlets I looked at before my holiday. More remarkably still, if I research the dollar online at xe.com on the day we arrived, the dollar was at 1.27 – meaning I was getting a better rate than the world banks!
I hope you can see the benefit of a little research ahead of your travels and I hope this has given you confidence that you are able to travel around the world without a credit card. You don’t have to, but you can.