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Guide to using debit cards overseas
Enjoy the convenience of overseas cash withdrawals and hassle-free payments when you travel with a debit card.
A debit card is convenient, light, and comes with a host of other perks such as nominal fees and easy replacement. For these reasons, travelling with a debit card is handy and an absolute essential.
Find out how you can utilise your debit card when travelling and what to look out for.
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How to use your debit card overseas
Using your debit card in a foreign country is pretty much the same as in Singapore. However, there are some important pre-travel preparations to bear in mind.
Before your travel, make sure to check for the following:
- Networks linked to your debit card. The logos for the different networks are typically printed on your card, such as Visa, Mastercard, PLUS, Cirrus, or Maestro. Overseas ATMs that are part of these networks will allow you to withdraw local currency with your card.
- Daily withdrawal or purchase limits. Make sure the limits on your card is sufficient for your projected expenses. If not, you can typically change the limits conveniently from your bank’s mobile banking app or internet banking platform.
- Enabled your card’s magnetic strip for overseas use. As a safety measure, the magnetic stripe on both credit and debit cards are disabled for overseas use by default. Make sure that you’ve enabled it before you travel and disable it once you’re back in Singapore.
Difference between a credit and debit card
In terms of looks and convenience, both credit and debit cards are almost identical. The main difference between them lies with where the funds come from. Here are some key differences:
- No grace period. When you pay via a debit card your funds are deducted immediately from your account balance – regardless if you’re paying by NETS, Mastercard or Visa. But with a credit card, the funds is first loaned to you by the bank, and you pay it back at a later date.
- Fewer rewards. Debit cards usually offer significantly less competitive rewards compared to credit cards.
- Doesn’t boost your credit score. Your credit rating is gradually improved as you repay your credit card bill on time. Since there’s no ‘borrowing’ for debit card, you’ll not be able to build your credit score.
- Lack of protection. Any unauthorised transactions charged to your debit card will cause you to lose the money immediately. The bank is not obliged to refund your money and most travel insurance do not cover for such losses. But with a credit card, you can make a police report and dispute these charges.
How to enable your card’s magnetic strip for overseas use
To enhance card security and reduce the risk of unauthorised transactions, the Association of Banks in Singapore (ABS) had implemented an industry-wide measure in 2013 by disabling the magnetic stripe on both credit and debit cards for overseas use.
With the deactivation of the magnetic stripe, you may not be able your debit card for certain functions such as:
- Retail transactions at magnetic stripe/swipe terminals
- Overseas cash withdrawal
Most debit cards are also equipped with an EMV chip, which is protected by cryptographic encryption and eliminates the possibilities of the data duplication. As such, the EMV chip remains active for both local and overseas transactions. However, it’s important to note that EMV chips is not widely accepted at all destinations, so it’s advisable to enable your card’s magnetic stripe before travelling.
Most banks in Singapore allow you to enable/disable your card’s magnetic stripe through:
- Internet banking
- Mobile banking app
- ATMs in Singapore
Benefits of using your debit card overseas
- Convenience of cashless transactions. You don’t have to worry about carrying large sums of cash (and risk losing them) when you’re travelling.
- No risk of accumulating debt. You can easily stay accountable for your spending since the funds are deducted directly from your account balance. This way, you can avoid running a risk of making impulsive purchases that may choke up a debt with credit cards.
- No interest charges.Credit cards are known for charging high interest rates and late payment fees. With debit cards, you don’t need to fret about staying disciplined and paying off your balance every month.
What should I look out for?
When using your debit card overseas, make sure to look out for the following:
- Foreign currency transaction fee. This is an extra charge you must pay when paying for something overseas; making a payment which is processed by a foreign bank; or purchasing something in a non-SGD currency. It’s usually set at about 2.5% to 3.5% of your payment.
- Currency conversion fee. When you’re travelling, some establishments may offer the option for you to pay in the local currency or in Singapore dollars. If you choose to pay in Singapore dollars, the transaction will be processed using Dynamic Currency Conversion (DCC). This option usually costs you a great deal more than paying in the local currency. Paying in your billing currency is an expensive practice that may potentially result in additional costs as high as 15%.
- Overseas ATM withdrawal fees. Using your card to withdraw cash will also usually leads to higher interest charges at the cash advance interest rate. Read your card’s terms and conditions with care so that you’re aware of all the fees and charges you could face.
Safety tips when using your debit card overseas
Crime and scams are common in many parts of the world. To avoid getting caught in a sticky situation with no options to access your money, always practice safety precautions such as the following when using your debit card overseas:
- Stay safe when withdrawing cash. Avoid using the ATM at night and always keep your pin away from prying eyes.
- Keep all your ATM and transaction receipts. When you keep a record of your expenses, you can easily tally them with your account’s transaction history. If there’s any fraudulent transactions, make sure to contact your bank immediately.
- Inspect ATMs before using. Before inserting your card into an ATM, make sure to check for signs of card-skimmers – which captures the keystrokes as you input your PIN. Avoid using any ATMs with a crooked, loose, protruding or damaged card slot.
Additionally, you should always have an emergency or backup plan for finances in case you cannot access your funds via your bank.
Frequently asked questions
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