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Inbox Clips #4: How do I manage without credit cards? (Travel, Online Purchases)

I have had two fantastic questions asked of me since writing my post How to Have No Credit Cards, Protect Your Identity… and Be Safe. I hadn’t even thought of covering these topics and I am so greatful that the questions were asked! I’ll address one of the questions today and another tomorrow… and hopefully clear some things up and learn some good stuff

Rachel at Master Your Card wrote:

I do find that these days a credit card is essential for making online purchases and when travelling abroad. How do you plan to get over these obstacles?

Well, I’ll clear this whole thing up by telling you that my debit card has a VISA logo, and I use it for all of my purchases. Because my debit card has a VISA logo (it’s called a Bank of America Platinum Check Card… more commonly known as the VISA Check Card), it can be run as credit. To quote VISA:

A Visa check card is a debit card that looks similar to a credit card but acts like a check because the purchase amount is deducted from the cardholder’s checking account.

The difference in having a VISA credit card versus a VISA check card is in where the money is being drawn from. If you have a credit card, the money is added to your balance with VISA and you owe the money when the bill comes due. When you have a VISA (or MasterCard, whichever) check card, the money is taken out of your bank account balance, just as when you run the card as debit. The wonderful thing about having a check card is that you can run the card as debit or credit, and having both options is great for convenience. A debit card with a credit card logo allows you to do three things, all with the same card:

Run the card as debit. This is nice if you’re at, say, the grocery store, and want cash back (drawing more than you owe the grocery store off of the card, and recieving the difference at the register as cash).
Run the card as credit. This is most useful when buying online, buying at a gas station when it’s faster to run the card as credit, or at a retail store where debit isn’t accepted.
Use an ATM. Just as a debit card alone does, my check card acts as an ATM card should I want to make a withdrawl, balance inquiry, deposit, or do anything else at an ATM.

So, to answer the first part of your question, online purchases can be made with the VISA logo debit card as a credit card, which is how I’ve done all of my transations online for over a year. The money takes two or three days to process through VISA, but eventually it’s taken out of my bank account just as if I had run the card as debit.

I will jump the gun here and ask the question I assume many of you will ask now:

What about once you freeze your credit? Won’t you have to use the card only as debit from then on?

No. A credit freeze does only limits the amount of people who can access your credit information from all three major credit bureaus: Equifax, Experian, and TransUnion. A credit freeze does not stop you from using the credit cards you have open, and it does not stop you from being able to run a VISA check card as credit. After I freeze my credit, I will still be able to run my debit card as a check card (credit card) with the VISA logo, and the money will still be drawn from my bank account as normal.

In response to the part of your question about traveling abroad - you can use your check card as a credit card when abroad. I lived in Italy in 2004 to 2005 and used my VISA check card (the same one, incidentally - it’s about the expire!) the entire time I was there. You’ll find in Europe, however, especially in the smaller towns (I lived in Siena), that they far more frequently accept only cash than they do credit cards, so you’ll need to be able to use your card at ATMs as well.

When I lived in Siena, I made a weekly trip to the ATM and drew out up to 500 euros from the machine (that was my weekly limit on draws, decided by Bank of America). After converting the euros to dollars, Bank of America then charged me a small fee for having to make the converstion, but it was never more than $10. Some weeks I only drew 50 euros, and other weeks I’d draw the maximum (I paid for my rent in cash). But even using cash most of the time, I did use my VISA check card to buy train tickets and plane tickets and go to the opera, etc.. Besides the nominal fee, I was able to draw cash from an ATM in Italy just as I am down the street from my apartment here in Seattle.

If you’re going to be travelling to another country soon, be sure to remember these few things so that you don’t get into trouble:

Call your bank before you go and let them know that you will be out of the country, and that you authorize the card to be used in that country. I told my bank to expect charges to start occuring in London and Italy the week I left (in case I bought anything at London Heathrow Airport). Even then, a week after I was living in Italy, they called me (and left a voicemail with my US phone) asking if I authorized the charges on my debit VISA. So even if you call, you may have to make a followup call.
Plan ahead of time where you’ll be staying, and know what methods of payment they will take. In Italy, I knew ahead of time that my landlord would take cash or traveler’s checks as rent. Most major hotels will take credit cards or travellers checks, but not all will. If you’re traveling and staying at a hotel, know ahead of time, expecially in small towns. Of course, if you know you’ll be hostelling or staying at cheap little inns and “hotels,” bring enough cash with you to cover one night. In Paris, I just wandered around in Strasburg until I found a li’l place that was open and walked in. It was 20 euros a night, and I had about 100 on me, minus cab fare and one subway ticket.
Learn the word for “ATM” in the language of the place you’re going. In Italian it’s “bancomat.” If you say ATM, they have no idea what you want (Automatic Teller Machine doesn’t abbreviate and translate anywhere… in England it’s “cash(point) machine”, although they’ll probably know what you’re talking about if you say “ATM”).
Don’t assume that ATMs will be open at night. In Siena (Italy), they weren’t open past 9PM, except for on Tuesday and Friday, when they were open until 11PM (go figure?). They were also closed (barred up) all day on Sunday.
Don’t assume that your bank will let your draw from your account overseas, or in any other country, really. Ask them what the fees and costs associated with using your check card out-of-country are, and whether you’ll even be permitted to use it. Also, ask them what differences there are when using it as a check card versus using it as a debit card. The fees are likely to differ.
Ask your bank what your weekly, daily, and monthly limits are for drawing cash from your bank account at an ATM.

And a final tip with a story:

Before you go, write down the LOCAL phone number for your bank and put it somewhere safe and not with your purse/wallet. In the event that your wallet/purse is stolen, you will have to call the bank and 800 numbers (sometimes the only ones listed on their website) will not work from long distance, even if you dial them properly.

I actually had my purse stolen a few months into living in Italy and I called the bank the same night (while drunk, even!) to temporarily put a hold on my account. My friends and teacher at school gave me about 50 euros to get by while the bank sent me a new card, but my purse ended up being found the next day in an alley completely intact, with everything inside except for a little cash from my wallet and my cell phone. Thank GOD for that. I then had to call the bank AGAIN and unfreeze my account and start checking my account online every day in the event that the theif got the card numbers (they were small beans crooks, and didn’t).

Because I had the local phone number in my suitcase at home, I was able to call the bank on my phone card (also in my room) and though it ate up five euros, I was able to straighten everything out the night it happened. If I hadn’t had the number, I would have had to wait until the next day when an internet cafe was open to find the number online and then wait until that night (time difference) to call and talk to someone at my local bank (because again, 800 numbers do not work).

Is there anything I didn’t cover? I hope this answers a lot of your questions!

Filed Under Inbox Clips - Reader Q&A, Just My Life - Stories, Etc., Money and Finance, Random Tips, Tricks, and Advice

Comments

8 Responses to “Inbox Clips #4: How do I manage without credit cards? (Travel, Online Purchases)”

Jonathan @ MYC on April 8th, 2008 9:14 pm

Hey Shanti, great post!

The prospect of my card suddenly being canceled while I’m overseas scares the sh*t out of me.

A friends brother went to Colombia and forgot to tell the bank. Long story short, he ended up having to sell all his clothes on the street just to make enough money to get by until they could issue him a new one. Ughhh…

P.S: I added you to my blogroll. Yay!
shanti on April 8th, 2008 9:33 pm

Eek - that’s a bad story. But you know, in general, losing your card overseas is not the end of the world! Here’s some info…

For other readers - if you have your card stolen in a foreign country and you have no place to get money, you can always have a family member wire you a small amount of money through Western Union or similar to get by on until you resolve your credit card issue with the bank/card company.

If you don’t even have money to place a phone call, just dial 1-800-COLLECT and the phone call will be charged to the receiver of the call and you can make call for “free.” You can then explain to your friend/family member that you will pay them back for the call (keep it short). It will cost more money than a phone card call, but it won’t be the end of the world, and desperate times call for desperate measures… BEFORE you sell the clothes on your back! And DON”T CALL A CELL PHONE unless you have to - the bill for the collect call will be a lot more to call a cell phone.

Did that cover everything? It may take a day or two to get the wire transfer, but in that time you should be OK wherever you’re staying and (hopefully) know someone who can give you food for a day.

There is a reason that I always keep $30 in my suitcase (at my hotel/house) when traveling now - because I know that when I was in Italy, if I hadn’t known anyone there, I would have been hard-pressed to eat for the day I was without my purse.
Emily on April 9th, 2008 5:24 am

Great post, Shanti! I’ve been enjoying reading all your stuff but have been guilty of relying on my reader and not stopping over to say hi enough. As much as I love my reader, it definitely puts a disconnect in the blogworld. Ah well, thanks for stopping by my blog and commenting. I didn’t even know about the fruwiki, but sure go ahead and add my list! I need to get out more. How did I not know about that? *slappingself*

Take care!
Mydailydollars on April 9th, 2008 5:40 am

I agree with Jonathan.. . great post! I use my debit card for almost everything except online purchases. I have an irrational fear that someone will raid my account. However, you made me re-think that. Can you dispute any unauthorized purchase made with your debit card? I guess my fear is that my checking account could get drained!
WWSD #5: How can I get a mortgage without a credit score? | Antishay Ventenne on April 9th, 2008 10:30 pm

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Emily @ Taking Charge on April 17th, 2008 12:05 pm

Thanks so much for this post! I’m going to Europe for two weeks this summer and have been getting nervous about the credit card/debit card situation. I planned to call ahead and let my banks know I’ll be overseas, but I’ve heard they sometimes freeze your accounts anyway. I will definitely make sure to follow-up with a second call. The local number tip is a great idea, too. And while I agree with you, debit cards are better than credit cards in so many instances, I like having a few credit cards in my wallet for a few reasons. Most rental car companies and nice hotels will only accept credit cards to hold reservations. Also, debit cards don’t build credit, and without good credit, you won’t get the best rates for car insurance, mortgage, etc. I use my credit card most frequently on a day-to-day basis, but I do like having my credit card just in case of emergencies. They’re also nice if you need to buy a plane ticket but aren’t getting your paycheck for another week. Back to studying abroad, though, did you incur any foreign transaction fees while abroad? I just got a Capitol One credit card because they’re the only credit card issuer that doesn’t have foreign transaction fees. But if a debit card doesn’t have any, I may plan to use that instead. Anyway, thanks again for the spending abroad tips — those will come in handy!
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