Using a Credit or Debit Card in the USA (2024)

22nd of June 2022

When you travel abroad, one of the most critical aspects of planning is how much moneyyou will need and how you will pay for different transactions, such as hotels, eating out,transport and day trips etc.

Is it best to take cash or a card to the USA?

Carrying a large amount of cash can be risky, so it is better to plan alternative paymentmethods such as using credit and debit cards

To minimise how much money you need to take on your holiday to the US, paying for hotelsand day trips in advance wherever possible is a good idea by paying online before your trip.

This way, less money will be required while you are in the US, so you don't have to worryabout losing cash or having any problems paying by card

This will also help you avoid extra charges for using credit cards overseas or any cashwithdrawal fees abroad.

Taking cash abroad

Many people will choose to take a small amount of cash to pay for restaurant tips or smallitems such as water or food at the airport or on the flight.

Having multiple options such as travel money, debit and credit cards and using payment appssuch as Apple Pay or Google Pay will give you peace of mind when travelling to the USA.

Exchange rates for the USA

The exchange rates to convert GBP to US dollar varies at different currency exchange providers,so if you are planning on taking some local currency with you to the USA, you can comparethe UK companies' rates.

Ordering your currency before you travel is usually a better option than exchanging currencyat the airport or when you get to the USA.

Some currency exchange companies will even deliver the cash to you by courier, as long asyou order it in time.

Using a credit card abroad

When travelling, one of the safest ways to make purchases is to use a credit card abroad,as you will have extra protection from your credit card provider compared to using a debitcard. The Consumer Credit Act provides you with protection on purchases.

Using a credit card in the USA

If you plan on paying with a credit or debit card when travelling in the USA, you must understandthe charges that may be applicable, and you will also need to check the card(s) you areplanning on using will be accepted in the USA.

Visa, Mastercard and American Express cards are widely accepted in the US, so you might facedifficulties paying if you do not have one of these.

It is worth noting that paying with the chip cards payment method that is common in the UK isnot used as widely available in the US, as many shops and restaurants still use the insertand sign method.

Foreign transaction fees

Using a credit card abroad is one of the easiest ways to spend money abroad and is alsoone of the safest ways.

However, it is important to understand the impact of foreign currency conversion fees and checkwhether a foreign transaction fee is applicable.

If you are considering applying for a new credit card for your trip to the US, you shouldcompare the foreign transaction fees, foreign cash transaction fees and purchase rate ofeach credit card company.

Best ways to withdraw cash in the USA

Many credit card providers in the UK have a 3% foreign cash transaction fee, so withdrawing alarge amount of money on the card when you are in the US could end up costing you a lot in fees,especially on top of other credit card fees like interest charges.

You should check whether there is a fee for ATM withdrawals, as there may be a fee of around$2 - $3 applied by the cash machine owner, which will be on top of any transaction fees andinterest that you may end up paying.

It is also possible to ask for cash back at supermarkets on a debit card or credit card, butyou will need to provide proof of your identity, such as your passport, to use this service.

Cash advance fees

If you are withdrawing cash with a credit card, your credit card provider may charge you acash advance fee, so you should check the cash advance fee before you travel to the USA.

Using a credit card or debit card in the USA is very much like using it in the UK, and theATM should provide you with the exchange rate you will be using when you make a cash withdrawal.

Like in the UK, you should be aware of skimmers, which are attached to ATMs to steal card details.

To ensure you do not use a cash machine with a skimmer on, it is best to use ATMs locatedinside a bank or a venue where it is unlikely that someone has been able to tamper with it.

Should I pay in sterling or local currency?

When travelling abroad, you will often be presented with the option to pay in sterling. Inthe US and other places you travel to around the world, using this option will usuallycost you more.

The exchange rate is generally less favourable, and you may also end up payingcurrency conversion fees.

It would be best if you have different payment options in case of the worst-case scenarioof losing your card, money, bag etc.

If you have Apple Pay or Google Pay on your phone, this will provide you with a backupoption if your card doesn't work or gets lost or stolen.

Repaying your credit card

When you apply for your credit card, you will be required to choose a payment method torepay any credit that accumulates, including interest charges and any applicable flat fee.

With most credit card companies, you can request to set up direct debits from yourcurrent account to pay a selected amount each month, or you can opt to pay the fulloutstanding balance or even the minimum amount.

You should regularly check your balance to ensure adequate money in your current accountto pay the amount agreed in your direct debits to avoid any bank charges.

Download the mobile banking app

You should also be able to set up the mobile banking app for your credit card, which willhelp you to monitor your overseas spending.

It is recommended that you check your credit card balance regularly while you are inthe USA and check each currency conversion fee and cash fee.

Monitoring your credit card fees abroad

This will help you understand how much your transactions amount to when all relevantcharges are applied. You should be sent a monthly statement that includes the chargedinterest for the month.

Your statement should be available through your internet banking app, so you can accessthe statement while you are travelling abroad.

Prepaid cards

There are alternative methods to withdraw cash while in the USA, such as using aprepaid card to withdraw money.

Prepaid credit cards and debit cards can often work out better with a perfect exchangerate, and the card provider will usually charge a fee of between 1% and 2.5%.

The fees will vary from one card provider to the next, so you should compare the availableprepaid travel credit cards to see which one will be the cheapest to use.

Benefits of using a prepaid card abroad

Choosing a prepaid card over alternative ways of spending abroad can help ensure youdo not spend more than you can afford.

You also will not be required to set up a direct debit, as you prepay the money and arenot borrowing money from a lender.

The prepaid card can be used exactly the same way as a standard debit or credit card abroad.

One of the top benefits is that you can lock in the exchange rate before you travel, soeven if the exchange rate changes, you won't be paying any more to use your card abroad.

Can I withdraw money with a prepaid card abroad?

You can still use features such as getting a cash advance to withdraw local currency butonce you have reached the limit, you cannot spend more unless you reload your card.

There will be an initial load fee plus any fees for reloading, so it is better to carefullybudget how much you will need to avoid paying the fees twice.

What is the tipping etiquette in the USA?

In the USA, it is customary to leave a tip in bars, restaurants and hotels. You willusually need cash to be able to leave a tip.

How much should I tip in the USA?

Generally, 15% is around the standard amount for a tip, although if you have receivedgood service, you might consider leaving 18%-25%.

You can provide the tip based on the amount before tax, which will prevent a fee fromgoing to the local government but ensure that the person serving you receives their full tip.

How do I pay for a taxi in the USA?

Most taxis in the USA will accept credit or debit cards, or you can pay for any taxi ridesby cash. It is polite to leave a tip of around 10% or more, provided that you received agood level of service.

Preparing for your trip to the USA

Arranging your payment options may take a while. For example, if you need to apply for acredit card, you should start preparations as soon as you book your holiday to the USA. Thatwill also give you plenty of time to research the different credit facilities and find themost cost-effective method for spending overseas.

As well as organising your USA payment options, you should ensure that your passport isvalid for at least six months after you travel to the USA. You must also apply for therelevant travel authorisation form, either a visa or an ESTA.

Do I need a visa or an ESTA?

The travel authorisation you require will depend on a number of factors, such as whetheryou are a citizen of a country in thevisa waiver program (VWP) and what your purpose oftravelling to the US is.

If you are a citizen of a country in the VWP and your visit is for tourism, medical ortransit purposes, you can apply for an ESTA, provided that you will not be staying inthe USA for more than 90 days.

Applying for an ESTA

The application process for an ESTA is much more straightforward thanapplying for a visa, and it costs significantly less than the application fee. You canapply for an ESTA using a short online form and use your credit card or debit card tomake the online payment for the application fee.

Once you have submitted your ESTA application, your details will be screened and ifyour ESTA is approved, it will be electronically linked to your passport. Your ESTAwill be valid for two years, or until your existing passport expires and within thistime, you can use your ESTA for multiple trips to the USA.

Applying for a visa

Your purpose for travelling to the USA must be covered under the ESTA terms, or you wouldneed to apply for a visa instead. For example, if you travelled to the USA with an ESTAand then wanted to work or study in the USA, you would need to apply for a work orstudy visa.

To apply for a visa, you would be required to arrange an interview at the US Embassy andprovide the requested documents related to your visa application.