Traveling with Your Debit Card
Debit card use is on the rise as consumers avoid using their credit cards. The reasons vary, from attempting to prevent accruing more debt to dissatisfaction with increased fees. If you are one of these individuals it’s important to know that while debit cards are a great tool for managing money, the cards have some features which travelers should be aware of.
When the final dollar amount of a transaction is undetermined, such as a hotel stay, gas purchase or equipment rental, many businesses will put a security hold on your debit card (this applies to credit cards as well). Basically, the assumed dollar amount plus extra money will be held in reserve to cover any additional expenses (such as an item from the hotel refrigerator or damage to the rented equipment). This hold will be in place until the actual money comes through, or a later date as established by bank policy, which may take several days. Normally, this isn’t an issue for card holders; however, if you are traveling and staying at several different hotels throughout the trip, you may find yourself unable to access all of your money due to these compounding holds.
If your card is stolen, the good news is that many debit card companies are extending the same consumer protections that cover credit cards. The bad news is that the transfer of money through a stolen debit card can be immediate, which means that the window of time to stop the potential loss is smaller. You need to read the terms of your debit card agreement to understand the specific consumer protections associated with your debit card. There are also differences in security protections depending on whether the debit card transaction was signature-based or PIN-based. If you cancel the card or account, you may have complications from legitimate charges, like outstanding checks, that have yet to clear. That means there may be more steps to take in working with the financial institution which issued the debit card. Banks, though, are well equipped and ready to help you through this process.
A potential downside to traveling with debit cards is that many car rental companies will not accept any payment method other than a credit card. Or the company will put so many obstacles in place as to make it nearly impossible to use your debit card, such as requesting copies of utility bills or requiring a credit check. Security holds may also be placed on your debit card by car rental companies.
It is possible to enjoyably travel with a debit card as your primary method of payment; however, you should make appropriate plans to compensate for the above concerns. For example, you may want to alternate use between your debit and credit cards during the trip. Additionally, you could create a separate account for your trip accessible by your debit card with a limited amount of funds in it to minimize losses in case of a theft or other security breach. Consult your local banker on the best options available to you for an easy, safe and stress-free vacation.