I no longer carry dollars in cash with me to the USA. You can use the card on your phone to pay everywhere from coffee shops and stores to stadium stands. It’s more convenient, faster, and cheaper. In this article, I’ll reveal some cultural differences, my backup option, and how to save up to 5% on each payment.
What Credit Card Is the Best for the USA
💳 Google Pay, Apple Pay, or Embossed Card
You can securely use your card on your phone in the USA, as contactless payments via Google Pay and Apple Pay are widely supported. Some payment terminals are directly linked to merchant loyalty programs. At one coffee shop, I paid four times with the same card and received a free coffee automatically after the fifth purchase.
However, I recommend taking an embossed credit card as a backup in case the merchant doesn’t have a contactless terminal.
💳 Mastercard, Visa Versus American Express
Mastercard and Visa payment cards are accepted by 10.6 million merchants in the USA, representing a 99% share. American Express cards are accepted by 10.5 million merchants. Thus, the choice of card association is virtually irrelevant.
💳 Debit Card Versus Credit Card
The terms credit, debit, and charge card are sometimes used interchangeably, which is incorrect. They each have distinct meanings:
- Debit card is issued by default with all bank accounts. With a debit card, you can only spend the money you have in your account.
- Credit card is essentially a loan, usually issued subject to proof of income. With a credit card, the bank lends the money, which must be repaid by a set deadline, or relatively high interest begins to accrue. In the USA, credit cards are almost exclusively used.
- Payment card collectively refers to debit and credit cards. In the United States, a credit card is sometimes incorrectly referred to as a “payment card/bank card,” regardless of type.
For regular payments in the USA, a debit card is sufficient. If you rent a car, you will likely need a credit card. Some car rental companies don’t accept debit cards as a matter of principle. Either bring your credit card with you or check the terms and conditions of the car rental company very carefully.
Best Card for Payments in the USA
💵 How to Save Money When Paying by Card in the USA
Different banks convert payments in dollars to your home currency at different rates. The conversion is always based on the exchange rate set by the ECB, plus the card association fee and the bank’s margin. This margin is used to pay for the bank’s operations, etc. The average margin for dollar payments has long been between 2.5-4%.
You can save all that margin by using Revolut or Wise cards for payments. These modern companies without brick-and-mortar branches have lower costs and their exchange rate aligns with the ECB rate. In both cases, the payment card can be carried on your phone as well as in traditional physical form.
Compared to a regular bank credit card, you save €0.036$0.04 for every $1,000 spent.
💵 Option 1: Revolut
Revolut is a virtual bank founded in the UK in 2015. It offers free account maintenance in more than 30 world currencies, with rates for payments at the ECB rate.
The Revolut account can be accessed with a Mastercard payment card in both virtual and physical embossed form. A notable feature is the Revolut Disposable Card, whose number changes after each payment. I use the card for various trial services on the internet. With it, the card is successfully verified, but I am never charged.
I use the Revolut card for payments and purchases in foreign currencies, so I save about €0.025$0.03 on every dollar I spend compared to my CSOB card. Additionally, I keep all foreign payments separate from my main account.
💵 Option 2: Wise
Founded in the UK in 2011, Wise operated under the name Transferwise until 2021. The account is controlled via a mobile app or the internet. Setting up and maintaining a Wise account is free; it takes about 15 minutes to set up via the app.
The Wise Visa mobile virtual card can be used to make payments as soon as the account is approved, again set up for free. You can also apply for a physical embossed Visa card, for which postage is charged. It will arrive in your mailbox within two to three weeks.
We use Wise in our company for payments abroad. In the first year of use, we saved €151.69$163 in foreign payment fees alone, with additional savings due to the exchange rate at the ECB rate.
Always Select Billing in USD at the Terminal
Certain payment terminals and ATMs offer users the option of paying in USA dollars or their home currency. If presented with this option, the screen will display the amount in your home currency that you’ll be charged.
Always select the pay in local currency option, which applies your bank’s exchange rate for the transaction. If you select your home currency, the terminal operator’s less favorable rate will be used. According to long-term observations, the difference can be up to €0.036$0.04 for every 1 USD. Consequently, a $1,000 payment could lead to a loss of up to €36$39 if the incorrect option is chosen.
The option to pay in your home currency is known as Dynamic Currency Conversion (DCC), and I have come across this service in Austria, Portugal, and Greece. To avoid this, request your bank to block the DCC service, or always opt for settlement in the local currency.
How to Pay by Card in the USA
When making a payment in a store, you may be asked whether you’re using a debit or credit card. Truthfully responding with ‘debit’ may confuse the cashier, as many have no experience with this. On one occasion, I was even refused service because of this.
It’s generally more straightforward to state that you’re using a credit card. Some European debit cards in the USA resemble credit cards. Most Americans are unfamiliar with cards that require a PIN code. If a payment error occurs, inform the cashier that you need to input a PIN. On the other hand, gas station kiosks often require a ZIP code; you can usually input a fictitious one (like 90210).
When paying with a physical card on an older terminal, swipe the card’s magnetic stripe through a slot in the screen. The cashier might ask you to show an ID (possibly a passport) and sign the receipt.
Double Pricing and ATM Usage Instead of Card Payment
Merchants in the USA often charge a fee to the bank for each transaction. As a result, some places may enforce a minimum card payment amount, or apply a different price for card transactions. For instance, I encountered a higher price when paying by card at a gas station.
Additionally, some clubs and restaurants do not accept credit cards but provide an automatic teller machine (ATM) for cash withdrawals.
USA Prices are Quoted Without Tax
Except for fuel, prices in the USA are always displayed without the sales tax included. The tax is added to the total amount at the checkout. So, if you see $10.00 on the price tag, you might pay, for example, $1.09 at the checkout.
The sales tax amount varies from state to state, which is one reason why prices are quoted without tax. Another reason is to ensure that consumers are aware of how much tax they’re paying.
Frequently Asked Questions About Card Payments in the USA
Can You Tip with a Credit Card?Yes, most merchants permit it. Quite often, you may encounter a rather direct prompt on the terminal to add a tip during checkout. Preset options (up to 30%) might be displayed, along with a ‘Skip’ button.
How Much is the Fee for Paying by Credit Card in the USA?The bank doesn’t charge a fee for using a card abroad. However, the merchant might impose a fee, especially for small purchases amounting to a few dollars. More significant than the fee for card payments is the exchange rate the bank uses to convert the payment to your home currency. Revolut and Wise cards offer the best exchange rates.
What is the ATM Withdrawal Fee in the USA?The ATM withdrawal fee varies based on the bank and bank account. Sometimes it’s a flat fee, while other times it’s a percentage of the withdrawn amount. Similar to card payments, the bank’s exchange rate for converting the withdrawal to your home currency is also crucial. Some ATMs might offer an unfavorable conversion to your home currency. Always decline this and opt for conversion into dollars.