Best ways to spend travel money in the USA: Debit & prepaid cards

The United States of America is a society of credit. If you’re travelling to the States, you can use your Visa, Mastercard and American Express cards everywhere. Banks are common and ATMs are inside most corner stores as well.

What is the best way to take and spend money in the USA?

You’ll find most Americans rely on their credit card or debit card to make purchases as much as cash. There are times when you’ll need to pay cash. For example paying for a drink at a small bar or buying a hotdog from a food truck might require cash. However, you will see that most merchants in American cities are set up with the infrastructure for card, contactless and mobile payments. Visa, Mastercard, American Express and Diners Club cards are widely accepted.

Travel money options for the United States

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Can I use a UK debit card in the USA?

You can use any Mastercard or Visa branded debit card in the United States, though you should be weary of using it abroad as there may be fees attached. Barclays will charge a 2.99% non-sterling transaction fee, Lloyd’s will charge a 2.99% non-sterling fee on cash withdrawals and purchases, and NatWest/RBS will charge a fee of 2.75%. In the case that you find yourself needing to use a debit card abroad, it’s worth checking if your bank is part of the Global Alliance, a group of banks with an agreement to give customers a cheaper way to withdraw money abroad.

It may be a better idea to open an account with a separate bank or e-money provider that provides either low or no overseas fees and when travelling abroad, use this card instead of your main bank account.

Using prepaid travel cards

All UK travel money card issuers allow you to load and spend in US dollars. The main advantage of these cards is you can lock in an exchange rate when you convert GBP to USD and spend without paying the extra 3% for currency conversion. Although Visa, Mastercard and American Express are accepted everywhere (if the merchant can accept a credit card they can also accept a travel card), not all of them have your name printed on the front, which may cause the merchant to reject them. These instances may be limited to smaller shops. Compare these cards by the fees. For example, some travel cards waive the international ATM withdrawal fee. The local ATM fee is unavoidable unless your travel money provider has a pre-arranged deal with a US bank. There’s also the initial load fee, the reload fee and inactivity fees to think about too.

Using credit cards

The US is a society of credit, and credit cards, there are no issues with Visa, Mastercard, American Express and Diners Club card acceptance. Contactless payment terminals are common at places like Walmart, Target, Kmart and other major retailers. The currency conversion fee is the main charge to avoid when you’re looking at travel friendly credit cards. The international ATM fee is the other main fee; however, due to the extra charges which come with a cash advance, you should avoid using your credit card to make cash withdrawals. Depending on your card provider, you can avoid some cash advance fees by loading your credit card with your own money (keeping a positive balance), but you forego anti-fraud guarantees when you spend your own money on your credit card.

Credit cards in the US

Using traveller’s cheques

Traveller’s cheques were once a staple for any overseas trip. In recent times, card acceptance and security have made these travel money products a burden.

How much sterling do I need to bring to the US?

There’s an old saying first coined in the Reader’s Digest, once you’re finished packing your suitcase, take out half the clothes and take double the money. Ultimately, how you take your money is up to you. Someone couch-surfing in San Francisco will have a different budget to someone on a New York shopping holiday. The USA also has a pretty big tipping culture – so keep this in mind when planning your travel budget.

New York service	Budget	Mid	Top
Accommodation	Hostel: £20 – £40 per night	Hotel / Motel: £105 per night	5 star hotel / Superior suite: £245+ per night
Food	Food truck: £4 – £7	Restaurant: £15 – £30	5-star restaurant: £35 a plate
Entertainment	Free festivals year round in American cities	Guggenheim Museum: £18	Broadway Musical: £140 – £250

_{*Prices are approximate and subject to change}

• Travel money options for USA at a glance

  Travel money option	Pros	Cons
  Debit cards for travel	No currency conversion, international ATM, account keeping fees Assistance in opening an account if you’re travelling through the US for an extended period	There can be fees attached to using a debit card – make sure to check the small print!
  Prepaid travel money cards	Locked-in exchange rates No currency conversion fee International ATM withdrawal fee waiver on some cards	Fees to consider such as local ATM, initial load, reload and inactivity fees
  Credit cards for travel	Accepted everywhere – contactless payment terminals are common Dedicated cards can help you dodge currency conversion fees	If you repay over a long time, this is an expensive option
  Traveller’s cheques	Acceptance Security	Can be costly with initial purchase charges Not all merchants accept traveller’s cheques
  Cash	Greater payment flexibility Convenience	More difficult to manage expenses Higher risk of theft

  _{This table is a general summary of the travel money products in the market. Features and benefits can vary between cards.}

• Paying with cash in the USA and tipping etiquette

  Dollar bills can give you the impression your wallet is fatter than it actually is. And although you can get by using your card for most purchases, there are times when you’re going to need cash. The USA has a culture of tipping, it’s a substitute for low wages. You’ll need cash to tip, especially if you’re at a bar, restaurant, club or hotel.

  Where?	How much should I tip?
  At a restaurant	Waiters should get anywhere between 10% and 20% of your bill. Some restaurants will add tips onto the final bill (more common in tourist areas), if this is the case, you don’t need to leave a tip.
  At a bar	Drinks are pretty cheap. It’s good form to tip $1 per drink. You may even get a free one from the bartender if you tip a $5.
  At the hotel	Tip the porter $2 – $5 for a big bag and an extra $1 for every other bag. Tip housekeepers anywhere from $5 – $10 a day.
  Taxis	10% – 20% of the fare
  Cafe	The barista making your coffee doesn’t necessarily need a tip unless he or she has done something special.

Buying currency in the UK

If you’d like to have American dollars when you arrive, you have a number of choices for getting cash changed in the UK. Look at your bank and look at foreign exchange providers such as Travelex or No1 Currency.

There’s no restriction on the amount of foreign currency or US dollars you can bring into the US. You must declare your cash at customs if you’re taking more than $10,000 or the foreign currency equivalent.

• Tip: Make sure you’ve applied for your United States ESTA (Electronic System for Travel Authorisation) before you leave for the USA. This will cost you $14 and you can pay by a Visa, Mastercard, American Express, Diners or Discover credit card.

Why you’ll need a combination of travel money options

Use a combination of travel money products which don’t charge for currency conversion and have low or no international ATM withdrawal fees. A travel card or debit card used in conjunction with a travel-friendly credit card will give you a cost-effective way to make both over the counter purchases and ATM withdrawals in the USA.

It’s important to have more than one way to access your money when you’re abroad. Travel to the United States is exciting, don’t make it stressful by limiting your options. By doing a little research before you go, you can save on fees which can easily add up to the cost of a night out or souvenir for a loved one.

You’ll find card payments are the norm in the USA, the currency conversion fee may not seem like much, but giving almost £10 for every $300 you spend or withdraw to your bank isn’t just unnecessary, it’s criminal. Compare travel money options and apply for a card you can use to spend for less in America to avoid throwing money at your bank while you’re visiting the United States of America.