Debit or credit card for overseas travel in 2025?
Debit and credit cards look pretty much the same, and the way you use them to transact can be very similar too. However, there are key differences in how a debit card works versus how a credit card works. The features and fees you get with each can vary enormously, which can make one or the other more suited to specific transaction types.
This guide walks through how debit cards and credit cards work – and which may be better for your overseas travel.
Debit Card vs. Credit Card: An Overview
In this guide we’ll explore the key differences between debit and credit cards and which may work better for overseas spending and cash withdrawals. We’ll also introduce some great examples of travel debit cards from Wise and Revolut, and strong credit card options from BankWest and American Express, so you can compare.
First, let’s take a look at some important points to know about debit cards vs credit cards.
Key takeaways:
- Debit and credit cards both enable cardholders to withdraw cash and make purchases
- Both debit and credit cards may have some limits on the countries they can be used in, confirm this with the bank directly
- Debit cards are connected to the user’s bank account and are limited to the available balance
- Credit cards offer a line of credit that can be borrowed against and repaid later
- Interest is charged on credit card purchase balances if not paid off within the grace period – grace periods may not apply for cash advances
- Using a credit card contributes to building a credit history, while debit cards do not
Debit and credit cards for international travel compared
When choosing a card for overseas use you’ll need to consider a few factors, including how widely the card will be accepted, how secure it is to spend with, the costs to get and use your card, and how currency conversion works when you spend abroad.
Here we introduce 2 great debit cards for international use – the Wise card and the Revolut card – as well as travel credit cards from BankWest and American Express. We’ve covered key factors for international card usage side by side to give you a flavour:
| Name | Debit/Credit | Currency conversion on purchases | Interest rate | Overseas ATM fee | Ongoing fees |
|---|---|---|---|---|---|
| Wise debit card | Debit | Mid-market exchange rate | Not applicable | 2 withdrawals to 350 AUD/month for free*, then 1.5 AUD + 1.75% | None |
| Revolut debit card | Debit | Revolut rate to plan limit Monday – Friday, then 0.5%
1% out of hours fee on weekends |
Not applicable | No fee to plan limit, then 2% (minimum 1.5 AUD) | Monthly fees from 0 AUD/month to 24.99 AUD/month |
| Bankwest Zero Platinum Mastercard
|
Credit | Mastercard rate | 18.99% p.a. representative (variable) | Cash advance fee of 3% or 4 AUD + interest | No annual fee |
| American Express Velocity Escape Plus Card
|
Credit | American Express rate + 3% foreign transaction fee | 23.99% p.a. representative (variable) | Not available | 95 AUD annual fee |
*Details correct at time of research – 5th March 2025
*Wise will not charge you for these withdrawals, but some additional charges may occur from independent ATM networks
As you can see, the international features and costs of different cards can vary quite a lot. When choosing a card you’ll want to look at ongoing fees – which may be due monthly or annually – and the costs for transactions abroad. Overseas fees can include a foreign transaction or currency conversion fee, as well as ATM fees or cash advance costs if you choose a credit card option. We’ll explore all of these factors in more detail throughout this guide.
What is a debit card?
A debit card can be issued by a bank or a specialist provider, and is linked to an underlying account which may hold AUD or a selection of currencies. To use your debit card you must have a balance in your linked account. When you transact the purchase amount is debited from your balance more or less instantly. If you have a debit card from a provider like Wise or Revolut your balance could be in foreign currencies as well as AUD. If you spend overseas and hold the currency you need in your account, the funds are deducted from the appropriate currency balance, with no additional fee to pay.
When is a debit card a good choice?
You may to use a debit card in these situations:
- To manage everyday spending – using your debit card is convenient for purchases and getting cash at an ATM, allowing you to manage your everyday finances easily
- To spend when you travel – international debit cards like the Wise card let you hold foreign currencies and cut the costs of foreign transactions. Your card is linked to a digital account, and can be frozen, unfrozen and managed with just your phone, adding peace of mind when you’re abroad
- To manage a budget – you can usually only spend the funds you have added to your account, which makes budgeting simple and avoids interest charges
What is a credit card?
A credit card is usually issued by a bank or payment network like American Express. The card is linked to a line of credit, which you’re offered subject to your eligibility and the issuer’s view of your creditworthiness. You can spend and withdraw to your credit limit every month, and then repay the amount to the card issuer at the end of the statement period. If you do not repay the full amount you’ll be subject to interest charges, and if you fail to repay on time or to the minimum payment amount, penalties may apply.
If you use a credit card overseas, the costs of your purchase are converted to AUD to be added to your bill. If your card has a foreign transaction fee, this fee is also added to the converted amount and must be paid along with the rest of your bill.
When is a credit card the best choice?
You might prefer to use a credit card in the following situations:
- To earn rewards: your credit card may offer cash back, reward points, lifestyle benefits or air miles for example, which you earn as you spend
- To build your credit score: using your credit card responsibly can improve your credit score and add to your credit history. Having a strong credit history can help you access more credit products, or get better interest rates in future
- To buy big ticket items: if you’re spending a large amount a credit card can help you manage your payments over a few months. Interest may apply when you do this, but many cards offer installment plans to help manage payments effectively
- To get purchase protections: many credit cards offer additional protection in the event that your purchase doesn’t arrive, isn’t as described, is faulty or otherwise disappoints you
Key differences between debit and credit cards
So, how do credit cards vs debit cards measure up across important features? Some features are similar across both card types, but in many cases, the features – and therefore the customer appeal – is quite different. Here’s a summary:
| Feature | Debit cards | Credit cards |
|---|---|---|
| Builds credit history | No | Yes – with responsible use you can improve your credit score |
| Money comes out of your bank account | Yes | No – repay your bill at the end of the statement period |
| You can purchase something and pay later | No – you usually need the money in advance | Yes |
| Liability for stolen cards/charges | Subject to bank and network rules | Subject to bank and network rules |
| Fees | Variable fees including ATM costs, foreign transaction fees and account maintenance charges | Variable fees including cash advance costs, foreign transaction fees and penalties for late payment |
| Spending limits | Spend to your account balance, or the bank’s limit – whichever is lower | Spend to your credit limit, which is set by the card issuer |
| Cost to order and maintain | There may be a card order fee and some accounts have monthly fees | Usually no card order fee, but monthly or annual fees may apply |
| Best to use in an emergency | Depends on available balance | If you have credit left, a credit card can be helpful for emergencies |
| Interest charges | None | Variable and set by the card issuer |
| Reward options | Cards may offer partner discounts or offers, but these can be limited | Cards often offer many rewards, perks, discounts and cash back options |
Making a payment with a debit or credit card looks pretty much the same, but the way the cards work are very different. Both card types have their own benefits and drawbacks, which can depend on the transaction type as well as the specific card you have.
Pros and cons of debit cards when travelling abroad
| Pros of debit card | Cons of debit card |
|---|---|
| ✅Often cheap to use, with no interest to pay
✅No credit check or minimum income needed ✅Some cards let you hold foreign currencies to cut overseas usage costs |
❌You need the funds in advance before you can spend
❌Rewards may be limited ❌Can’t be used as a payment guarantee |
Pros and cons of credit cards
| Pros of credit card | Cons of credit card |
|---|---|
| ✅Earn rewards, cash back, air miles and other perks
✅Spread the costs of your spending across months if you need to ✅Some cards offer additional purchase insurances |
❌Minimum income or credit score rules usually apply
❌Fees can be high, including fixed costs and interest ❌Can damage your credit score if you don’t repay on time and in full |
How does a debit card work?
You can get a debit card from a bank or a specialist provider, which is linked to an underlying account like an everyday account or a digital multi-currency account. The card can be used to spend and make convenient cash withdrawals, anywhere the card’s network is accepted. When a customer makes a payment or withdrawal, the funds are debited from the linked account instantly or almost instantly. If the account doesn’t hold enough funds to cover the transaction it may be declined.
Debit cards have a unique personal identification number (PIN), and often have contactless features. This means you can use your card to tap and pay for small purchases, or you can use the card’s chip technology with your PIN at an ATM or when paying in person. This makes small transactions convenient, but also gives an added layer of security where you need it. When you’re shopping online you won’t use your PIN, but for security, you’re often asked to enter the card’s validation code which proves you’re in possession of the physical issue of the card.
Debit cards operate through a processing network like Visa or Mastercard. Your card will show the symbol of the network it is on, and you can simply look out for this logo on ATMs and at the checkout online or in a store to know if your card can be used.
How does a credit card work?
Credit cards are usually issued by banks or regulated specialist providers. You don’t need to have an everyday account with a bank to apply for a credit card, as it’s a different type of product. Instead you’ll complete an application online or in person, to allow your bank or card issuer to assess your creditworthiness and eligibility for the card. You can often check your eligibility in principle online before you complete a full application, to avoid wasting time.
When you’re approved for a credit card you’re issued a line of credit which you can then spend. Credit lines vary and are set according to the bank’s policy and your personal situation. You’ll receive a statement of your account – usually monthly – and then need to repay the card issuer.
You’ll need to pay at least a minimum repayment amount by a given date to avoid penalties. If you don’t pay the full amount you’ll need to pay interest on the remainder, according to the terms of the card. You can avoid this charge by repaying your card balance in full before the payment due date.
Credit cards – like debit cards – operate on an underlying payment network like American Express, Visa or Mastercard. Look for the card’s network logo to check if you can spend. There are also some store and private label credit cards which can only be used in certain locations.
You can use many credit cards to make ATM withdrawals, although some cards do not offer this facility. If you use a credit card to get cash at an ATM there’s usually a cash advance fee and you may start to accrue interest on the drawn amount instantly.
Read also: Debit cards vs credit cards for everyday use
Conclusion: What’s the difference between a credit card and a debit card for overseas travels – and which is better?
Both credit cards and debit cards have their own uses for overseas travel. Neither is better per se – but one or the other may be better for specific transactions or in specific situations.
You may decide to use a credit card overseas to spread the costs of your trip over a few months, or as an emergency backup in case you run short of funds. However, this can mean paying extra fees so it’s not the right option all the time.
As an alternative you may want to get an international debit card from a provider like Wise or Revolut to lower the costs of international transactions and access cheap or free ATM withdrawals. This means having money in advance of transacting, but it’s also a good way to manage a stricter budget and pay less overall.
For many people, having both a credit card and a debit card when they travel is the best solution. You can then choose to use credit when you’re buying big ticket items, and debit for cash and everyday purchases. Use this guide to decide what works best for you and check out the great cards and providers we covered earlier, like the Wise international debit card for low cost overseas spending.
FAQ
Which is better between credit and debit?
Neither credit or debit cards are better overall. It all depends on the transaction you need to make. Credit cards can help you earn rewards and spread the costs of a big purchase, but they may cost more overall than debit cards. Debit cards can be cheap and flexible but they do mean you have to have the funds in advance of spending. Weigh up the options before you transact to get the right one for you.
What are the advantages of debit cards?
Debit cards are typically cheap to use, and international debit cards like those from Wise and Revolut also have the advantage that they link to multi-currency accounts. This can reduce the costs of overseas spending and help you to avoid foreign transaction fees.
What are the advantages of credit cards?
Credit cards can help you earn rewards and cash back as you spend, or unlock travel and lifestyle benefits. Credit cards are also accepted as payment guaranteed when you hire a car or check into a hotel for example.
