Credit card: what is it, and should you take it with you on a trip or while backpacking?

What is a credit card?

• A credit card is a payment card that you use to make purchases on credit (you pay afterwards). It is not a direct PIN payment; the card company advances the amount and you pay it back later.
• Nowadays, you also have debit cards that can be used as a credit card. These are often used by digital nomads.

What can you use credit cards for when traveling and backpacking?

• Credit cards are incredibly useful for booking things. For example, you can book plane tickets, hotels and hostels.
• For renting a car: you often have to guarantee the deposit with your credit card.
• Medical costs often have to be paid with a credit card.
• Booking activities online: can often only be done with a credit card.
• As a backup for your debit card: you can also withdraw cash with it (although it is a bit more expensive).
• Paying a deposit: for all sorts of things.

When do you take a credit card with you when traveling or backpacking?

• A credit card is useful for international travel, especially outside Europe.
• As a backup for emergencies. When travelling to countries where debit cards are less accepted (such as the US, some parts of Asia and Latin America).
• For applying for visas or online bookings.
• If you travel a lot and want to use travel benefits (insurance, savings system, cashback).

Where can you buy credit cards in the world?

• People usually take a credit card they already have
• In some countries you can also apply for a local credit card. But if you don't live there, this is almost impossible.
• Buying a credit card while you are travelling is therefore almost impossible. Or you have to have it sent to your home address and have someone from home send it to your holiday address.

How can you insure credit cards via your travel insurance

• Credit cards are often partly insured via the card itself, provided that you make the purchase with that card, for example, you sometimes have purchase insurance: in case of theft or damage to items, and cancellation or basic travel insurance
• Your travel insurance usually covers stolen or lost cards in combination with theft of your wallet
• Call your card company immediately to block the card
• Sometimes there are separate credit card insurances for fraud, misuse or skimming.

Modern alternatives to the credit card

• A credit card means that you build up credit, which can be a financial risk. A fairly recent development is the prepaid money cards and debit cards that work on the credit card network.

The prepaid credit card

• The prepaid 'money' cards are relatively new on the market, you can top up these cards to a certain amount at, for example, Visa ATMs in country X (if you have a Visa money card) and then use them to withdraw money in the local currency at cash machines (ATMs) in country Y. When you have withdrawn your entire credit, you can throw away the prepaid money card.
• A relatively safe system because you withdraw your money with a PIN number.
• If you lose your prepaid money card, it is more difficult to get your money back (sometimes not at all) than was the case with traveller's cheques in the past. In principle, you will receive a replacement card and emergency cash supply.
• No personal details are put on the prepaid money card.
• You can only spend the amount that you have put on the card and withdrawals will also cost you an amount comparable to withdrawing money abroad and differ per brand.
• The prepaid money card is widely used, but not in all countries.

Debit card on credit card network

• You will receive a regular debit card that works on the Visa or MasterCard network. It can therefore be used in all places where credit cards also work.
• This card is linked to a real bank account, so you will also receive an IBAN.
• You can only spend what is in your account.
• This is usually done via an online bank (N26, Wise, Bunq, Revolut).
• The exchange rate costs are often low, you will receive real-time notifications as security and you can work with multiple currencies.
• It is an ideal option for backpackers that is commonly used nowadays.