Should I Use a Credit Card or Cash When on Vacation?

Cards have the advantage, but cash has its place, too. Here are the benefits and downsides of using each payment method.
Jae Bratton
Lindsay Konsko
By Lindsay Konsko and  Jae Bratton 
Edited by Erin Hurd

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On a family vacation to the Caribbean, I lost my wallet on a bus. Inside was $400 in cash and two credit cards. While my husband tried to track down the bus, I kicked myself for being so careless. Then, I locked access to both cards in my app and tried to accept that I would never see the cash again.

Credit cards are generally more secure than cash, but they have some downsides, too. Even after this experience, I’d still recommend traveling with a little cash in addition to credit cards. Paying for my family’s checked bags could only be done with a credit card, but taxis on the island were cash-only. Here are some pluses and minuses of each form of payment.

Advantages of using credit cards

Security: Carrying a wad of cash is rarely a good idea, especially when you're away from home and distracted to the max. If your wallet is lost or stolen, any cash is probably gone forever. If you lose your credit card, you can cancel it online or through the app and get a replacement expedited to you. You won't be held liable for unauthorized charges, either.

Acceptance: Plenty of places accept only credit cards. Cashless transactions can be faster than exchanging bills and coins. They also eliminate the need for merchants to store huge sums of money, which protects them from theft. It’s becoming more difficult to pay with cash en route to your destination, too. Certain airlines have gone entirely cashless for any in-flight transactions.

Bookings: Don't expect to be able to easily rent a car or check into a hotel room without a credit card. Even if it's possible, you'll be required to jump through hoops.

Rewards: You'll earn cash back, points or miles on purchases made with a rewards credit card and potentially even more with a travel card such as a co-branded hotel or airline card. For example, Hilton Honors American Express Surpass® Card cardholders get 12 points for every dollar spent on eligible purchases at a Hilton hotel or resort. Terms apply. In effect, the spending you do on this vacation could give you a head start paying for the next one.

Advantages of using cash

Budgeting: Some people find it easier to stay on budget when they pay with cash. No math required — when the cash is gone, you've hit your limit. If your spending discipline breaks down when you use credit cards, cash may be a better choice while you let loose on vacation.

No foreign transaction fees: Many credit cards charge an extra fee of up to 3% on purchases made outside the country, although you can find cards that don't.

No extra fees: Businesses pay interchange fees to banks for processing credit card payments, which eats into their profits. They may pass that surcharge onto consumers in order to recoup that fee, making cash the cheaper payment option in some cases.

Acceptance: That family-owned shop or street vendor may not be equipped to accept credit cards. For those occasions, you’ll need some cash.

Gratuity: Tipping those who serve you while on vacation, from the bellhop to the housekeeping staff, is easier with cash. And if you stay at an all-inclusive resort, you won’t have to pay for food and drinks, so it’s impossible to add a tip to the cost of the bill. Only cash will do in these situations.

What's next?

All information about Hilton Honors American Express Surpass® Card has been collected independently by NerdWallet. Hilton Honors American Express Surpass® Card is no longer available through NerdWallet.

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