Update 17 October 2018: After one year of using 3 different credit cards I updated the article below with some insights. The final verdict stays, but some interesting facts were added. I marked them in italics.
A quite regular discussion topic among my friends is the choice of credit card for traveling. Without credit card traveling is by now virtually impossible, or at least vastly inconvenient. Reserving hotels, booking flights, renting cars, ordering tickets, or even withdrawing cash. All works a lot smoother with the right credit card. But what makes a good credit card? The problem here is the complex set of criteria:
- No fees or interest
- Commonly accepted
- Good support in case of problems
- Transparency on balance and transactions
First a short introduction what these criteria mean.
No fees or interest
When using credit cards there are different kind of fees:
Foreign currency fee – mostly 1-2% of the price are charged on top for the currency conversion, e.g. if I pay 120$ with my credit card, the exchange rate is 1.20, then I’m charged 100 EUR. On top of that the bank charges 2% for the conversion, so the total is 102 EUR. Not much, but over time this adds up to quite some money.
Withdrawal fee – when withdrawing cash from an ATM the ATM owner can charge a fee (which will be shown on the ATM screen), and there is nothing you can do besides finding a different ATM brand. Some banks refund the fees upon request later, but this is based on goodwill. The second fee is charged by the credit card company and not displayed on the ATM. This is usually a percentage with a minimum amount, e.g. 2% but at least 5 EUR.
Yearly fee – the yearly (or monthly) fee some banks charge you for having the card at all. Usually comes with premium features like free luggage insurance, travel cancellation insurance, or cashback.
Credit interest – credit cards that are not evening out all debt every month usually charge interest on the remaining debt. For example if you pay 1000 EUR with your card but the bank only charges you 500 EUR per month, they will charge interest after the first month at the latest.
Different kinds of credit cards are differently accepted by stores and websites. Most widely accepted are VISA and MasterCard, American Express is ok, but still far behind. Discover exists but I only remember signs saying “we no longer accept Discover card”. So VISA is the most commonly accepted choice, MasterCard a good fallback if for some reason VISA is not accepted or not working.
Good suport in case of problems
When something happens to your credit card you’re usually not at home but somewhere with expensive roaming, bad wifi, no reception, completely different time zone, or all of the above. Having support that is easy to contact through various channels, available around the clock, resonds to non-urgent requests within 1-2 days, and focused on solving problems rather than finding them is really an advantage.
Transparency on balance and transactions
Back in the days where you got your monthly credit card bill some people sure got heart attacks when they saw how much they spent. Or found fraudulent payments. When traveling it is essential that you always know how much money you spent, on what, and where. For example by having notifications for spurious or larger transactions and an app or website to see all transactions instantly is essential.
This sounds like an impossible task and honestly, finding one card that fulfills all criteria is probably impossible. However, having only one credit card while traveling is not the best idea anyways. If one card gets stolen, lost, damaged, or somehow unusable, having a second card can save the day. I compared the cards I and my friends had to find the best combination. As I’m from Germany my recommendation here works if you are a resident in Germany.
My preferred combination of cards: comdirect VISA plus N26 MasterCard.
- Very reliable, German direct bank, part of CashGroup / Commerzbank
- VISA widely accepted, Debitcard included with higher acceptance within Germany
- Support available 24/7, very friendly and helpful
- Clean website with access to all transactions, SMS notification for unexpected transactions
- No withdrawal fee outside of the EU with VISA, inside EU with Debitcard (EC-Karte), in Germany only CashGroup ATM
Downside: foreign currency fee for payments (e.g. in shops, hotels, …), required checking account, but works best if it’s also your primary account (Gehaltskonto), no payback of ATM provider fees
- No foreign currency fee on payments
- All transactions instantly shown in app, notification as push message
- MasterCard mostly accepted
- Overdraft credit (Dispo) can be adjusted / activated on website in case you urgently need credit
Downside: Only 3-5 free cash withdrawals in Germany, foreign currency withdrawal fee, you need a checking account to use the credit card
Runner up: Santander 1plus VISA
- No fees for cash withdrawal and payments in any currency
- Payback of ATM provider fees (if receipt is scanned and mailed to them)
- No checking account required (though you have to charge it to avoid credit interest)
- VISA widely accepted
Monthly charging to checking accountOnly 25 EUR, the remaining debt will be kepts and generate interest
Downside: I’ve only heard bad things about the user support, I don’t really like their website, no contactless payment function, very annoying offline password reset
My preferred setup is:
All payments go through N26 MasterCard.
Cash withdrawal with comdirect VISA in non-EUR countries, an N26 MasterCard in EUR countries. Unless in countries like Thailand where all banks charge an ATM provider fee, where Santander VISA pays off.
N26 payments are exactly what I want. There is never a fee, I only pay the current MasterCard exchange rate, and I always see instantly what is charged to my account, in EUR and in transaction currency, given I have internet connection. Especially cash withdrawal with comdirect abroad is quite comfortable. Several times I had issues with ATMs in South America, because they charged fees that were not shown or returned the wrong number of bills. comdirect was always very helpful and refunded the costs.
Santander in place of N26 is no option, as I really like the transparency of N26. If you’re happy with your current checking account Santander 1plus VISA + N26 MasterCard is a viable option which saves you yet another checking account. But don’t underestimate the comfort of good customer support. comdirect really paid off for me.