Preparing Your Credit and Debit Cards

You know you will definitely need to spend money overseas, but in what form should you prepare it? Credit card or debit card? Which bank card should you get? How many cards do you need?

Before I flew for my exchange in Sweden, I had to mull over this and it was painful experience. An overly complicated problem needing many hours of googling and youtube distractions before I finally found what I needed to know.

I’ll be writing a series of 3 articles to share what I have found. Unfortunately, if you are contemplating on opening an overseas account, you’ll need to continue researching as I won’t be covering that in my articles haha.

In this article, I will explain about the different types of cards and how many cards you should bring for exchange. Now get ready for a super dry BUT important article (I will try to make this as painless as possible but I assure you that you will not regret reading this!)

Credit vs Debit

Now this is the first category of cards: Credit vs Debit. We all know that a credit card allows you to spend first and pay later, while a debit card pays on the spot when you use it. In Singapore’s context, a debit card is almost equivalent to using NETS for payment. Yet there are also other important differences such as….

1. Card Application
   • To apply for a credit card under your own name, you would need to earn an income of about $S30,000 a year. As such it is likely you will be getting a subsidiary credit card under your parent instead. Meanwhile you only really need a bank account to apply for your own debit card.
2. Fees
   • There are various fees associated to using either card that differs between banks (which I cover here). Generally though, you might be paying lesser when using a credit card over a debit card.
3. Spending Limit
   • Credit cards also allow you to spend beyond the amount of money you have in your account, which can be a good and bad thing, while debit cards allow you to limit your expenditure while feeling like you are spending “real money”.
4. Cash Advance / “Withdrawal”
   • Credit cards have the option of a “cash advance” from ATM machines which debit cards do not. By selecting cash advance instead of savings account, you can withdraw cash from the bank. However, PLEASE ONLY exercise this option as an absolute last emergency resort. You will be charged with extremely high interest rates (close to 30% compounded per annum for some banks). I am also telling you this as a warning to be very careful as you withdraw cash.
5. Protection in case of loss
   • I personally feel that credit cards provide more protection in case of loss as you can attempt to reverse fraudulent transactions while for debit cards, the money spent will be instantly lost. Additionally I believe that you also have a longer time frame and easier procedure to correct fraudulent credit card expenditures.
   • However, debit cards also have some slight advantage. In certain countries, you can only use your debit card for payment after keying in your pin code. In case of loss in these countries, nobody can use your card at shops.

The Dai di companies (VISA vs MasterCard)

How many of you have been saying Visa or MasterCard when paying, but do not know what they actually meant? Welcome to the club HAHA. Now this is the second category that you need to know about cards: Visa vs MasterCard (and other providers)

To begin with, Visa and MasterCard are examples of payment network operators that handle the payment process between banks and merchants. They aren’t the companies that give you your credit and debit cards at all; that’s the job of the banks. Although there are some slight differences between the two (which you can google up), these are negligible for an average consumer. What actually matters to you is that the merchant you’re buying your H&M clothes from has a machine that accepts your cards. If he can only accept either one, you better pray you have it.

While I’m at it, I would also like to touch on the other brands under Visa and MasterCard.

The Big Family:
VISA / Plus / Electron vs  MasterCard / Cirrus / Maestro

You might have seen the above logos on the back of your credit and debit cards before. Now why is this relevant? That’s because it actually affects your overseas ATM withdrawal choices. (I’ll cover on cards vs cash in a separate article here.)

Visa and MasterCard as mentioned are payment networks operators, important for your credit and debit card expenditures. Banks can issue either credit or debit cards using the Visa or MasterCard network, and the merchant’s machine needs to accept the correct payment network.

Visa Plus and Cirrus are the interbank networks operated by Visa and MasterCard respectively, linking the cards of their own systems together. This corresponds to your overseas cash withdrawals. If you need to withdraw cash overseas, you will need to find an ATM / bankomat that has the correct logo. Although you may be able to withdraw without the correct logo, your actions will be limited and will be charged additional for withdrawals. [Also you may want to know that in Europe, some ATMs or payment machines will only accept a 4 digit pin-code. I’m not sure if there is any way around it other than to keep searching for a machine that will accept 6 digits.]

Finally, Visa Electron/Debit and Maestro are the brands of the Visa and MasterCard family brands respectively that only deal with debit cards. Additionally, Maestro is also an interbank network like Cirrus, and its cards can link to the Cirrus network. This means that you can also withdraw from an ATM with the Cirrus logo if you’re using a Maestro card. If you’re in Europe, you will probably see Maestro quite often.

There are also other payment network operators / interbank networks such as American Express (Amex) or UnionPay which I won’t be covering.

Card Combinations

So, just how many of these rich kid cards do I actually need?

What is the ideal number, covering every situation while keeping it to a minimal?

Do I need spare cards, in case I lose them?

How about ATM cards?

Now while this is subject to your own preference, I will be sharing my choices which are based on 3 cards. There are definitely more options and mine may not be the best for everybody. If you have suggestions, feel free to comment and I’ll consider including it here (:.

Option A (What I chose)

1. 1x Visa Debit Card + ATM
2. 1x MasterCard Debit Card + ATM
3. 1x MasterCard Subsidiary Credit card

This is the option that I had chosen for myself. Let me explain the reasons behind my choice:

• I have both Visa and MasterCard debit cards available should I run into a merchant whose payment machine can only accept one type. Thankfully I did not meet such a case, but it pays to be prepared. Also if I lose one, I still have a spare card for payment.
• Having both Visa and MasterCard ATM cards lets me draw from ATMs having either the Plus or Maestro/Cirrus logo. Also if I lose one, I still have a spare card for withdrawal.
• The choice of debit card over credit card for my ATM cards was deliberate. It prevents me from accidentally choosing a credit loan / cash advance by accident. If you’re using a credit card as an ATM card, you need to be very careful.
• However, I admit that having 2 debit cards as my main spending cards did cost me slightly more than if I had 2 credit cards.
• The subsidiary credit card is my emergency “in case shit happens” card which I will usually keep separate from the rest. So essentially, I am carrying 2+1 cards.

Option B

1. 1x Visa ATM
2. 1x MasterCard Credit/Debit Card + ATM
3. 1x Visa Subsidiary Credit card

Or reverse to MasterCard, Visa, MasterCard.

Now this option is slightly different. To break it down:

• You have both Visa and MasterCard credit/debit cards available should you run into a merchant whose payment machine can only accept one type. If you lose one, there’s still a spare card for payment.
• You have both Visa and MasterCard ATM cards to draw from Plus and Maestro/Cirrus networks. If you lose one, there’s still a spare card for withdrawal.
• The choice of a pure ATM card is deliberate. You now have a pure ATM card for cash withdrawal that won’t go wrong with accidental cash advance. Additionally, loss of this card is of slightly lesser risk as compared to if it was a debit card.
• Your second ATM card can be either debit or credit since you can rely on the pure ATM card for withdrawal from the correct ATM machine. If you choose a credit card, you may save a little but please be careful not to choose cash advance.
• The final subsidiary credit card needs to be brought along at all times to be prepared to pay through both Visa and MasterCard. You will always be bringing 3 cards, but now both can be safely be credit cards since you have the pure ATM card (which again is also less risky if lost).

Final Helpful Tips

1. Remember to activate your cards for overseas expenditure (and withdrawals) if you intend to spend money abroad via card. You can also set the deactivation date in advance. If you’re looking for a travel credit card without any annual fees, you can visit https://www.urlaubinbangkok.de/miles-and-more-gold-credit-card/.
2. Put a spending and withdrawal limit on your credit / debit / ATM cards depending on how much you expect to spend. This helps to control your expenditure as well as reduce amount of possible loss if you lose your card. Note that some banks allow a limit on a specific subsidiary credit card while others are only be able to set a combined limit on all the cards.
3. Additionally, set an SMS alert for all your cards’ expenditures (and to the minimum sum). If an expense of at least the set sum (eg S$1) is made on that card, you will be alerted to this via SMS. In some European countries like Sweden, you are required to hand over your IC when you use your cards. This is to verify your credentials as you are not using a local card. A friend of mine suspects that this was how somebody copied his card details and made a fraudulent expenditure using his card. Thankfully, he was alerted and quickly annulled his card.
4. Bring your banking token overseas. Some actions such as switching your bank contact number to an overseas one require you to have it. Be careful not to lose it!
5. Consider having 2 bank accounts. Deposit most of your funds in one account and a minimal amount in the second. By linking your cards to this second account, it serves as an emergency measure. If you lose your cards, your losses will up to your cards’ limits and the amount inside that second bank account.
6. Always have your bank’s emergency overseas contact number on hand (and perhaps your card details).

Yup I guess that’s about it. If you have made it this far, thanks for reading! Hope it helps (:.