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NEW YORK (MainStreet) —Leaving your credit cards at home while you are embarking on your next trip sounds like a noteworthy idea to cut down on costs, but this strategy increases the likelihood that fraudsters will find their way into your bank account.

Among consumers who plan to take a summer holiday this year, 20% planned to pay for their trip using cash or a debit card while 13% said they would use a credit card, according to a June online poll conducted by the National Foundation for Credit Counseling, a Washington, D.C.-based nonprofit organization.

Many holiday goers are concerned that utilizing credit cards will encourage them to make spur of the moment purchases they could regret later on when the bill materializes. Although using cash or a debit card can help consumers to avoid going over their budget, these two options carry serious consequences.

Security Risks

Security is a major risk when consumers only use their debit cards for traveling, because the maximum liability is still $500 after a card is lost or stolen, depending on the issuer. It might take days or even weeks for your bank to replace the money that was stolen from your account, which could be an issue if your bills are automatically deducted from your checking account.

“While many banks and credit unions have improved security options for debit cards, the fact remains that lost or stolen cards can give thieves access to drain checking and savings accounts quickly,” said Bruce McClary, vice president of public relations and external affairs for the National Foundation for Credit Counseling .

Traveling with cash is an even “riskier proposition,” but consumers can mitigate it by not withdrawing large sums and not carrying a large amount, he said.

One option is to travel only with the credit cards you need and lock up the other cards or passports in a hotel safety deposit box or room safe, said Marie White, CEO of Security Mentor, a Pacific Grove, Calif. security awareness training provider.

“Don’t leave sensitive information lying out in your room, even if it’s hidden,” she said. “Thieves have an uncanny knack for discovering what you hide.”

Losing a debit card has many repercussions, said Rick Scott, an assistant professor of finance at the Donald R. Tapia School of Business at Saint Leo University in Saint Leo, Fla.

“If the person has your code, your account can get wiped out and it can take weeks or months to get it back," he said. “In the meantime, checks and payments bounce and you pay penalties and fees." 

Fees at ATMs

Withdrawing cash from an ATM that is not in your bank’s network can come at a hefty price if you use them frequently. The average transaction fee is over four dollars, so check online to find an ATM in the network so that the withdrawals are free, said McClary.

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“If there are no ways around the ATM fees, cut costs by limiting the number of withdrawals,” he said. “If you can't find an ATM that allows free withdrawals, using the cash advance option at the register when making a store purchase may help you save on fees.”

Holds and Restrictions

Consumers who opt to use a debit card to reserve hotel rooms or refuel their SUV should be aware that retailers could put a hold on the card ranging from $150 to $300, which could affect the existing balance. Some hotels start the hold when consumers check into the hotel. Other companies such as some car rental companies only accept credit cards.

“If the balance of the debit card is not enough to accommodate the hold, it could result in overdraft fees or possible point of sale rejection,” McClary said. “You should be prepared to have an available balance that is enough to cover all of the holds as well as any other planned spending. This helps avoid costly overdrafts and the possible suspension of your account while you are on vacation.”

Identity Theft Issues

In many cases, travelers are not only losing just their credit cards, they also lose their passport or driver’s license, said White. The loss or theft of all those documents increases your chance of identity theft. Resolving a case of identity theft is not only expensive, but also time consuming and some studies have estimated it can take 70 hours to fix the problems.

Some precautions that travelers should take is not letting the credit card out of your sight during a purchase and avoid using public computers and Wi-Fi for banking or purchases.

Credit Card Benefits

Using a credit card during your vacation might be a better option to avoid some of these issues and still stay on top of your budget.

“The key to staying out of the red is to pay all charges as soon as possible and preferably before the end of the current billing cycle,” McClary said. “Responsible use of a credit card while traveling can reward users in many ways with redeemable points for purchases and possibly a few points toward a better credit rating.”

Most credit cards have benefits such as travel insurance and extended warranty claims, said Chip Manning, director of the Babson Center for Global Commerce at Sewanee, the University of the South in Sewanee, Tenn. The issuers will also correct charges such as currency issues if consumers contest the charge within 30 days of their statement.

“If you paid cash and it hits you later that they overcharged you, you only have regret,” he said.

The U.S. has not kept up with Europe in adopting more secure credit cards known as chip and PIN or chip and signature cards which feature extra security for authenticating purchases, said Geoff Sanders, CEO of LaunchKey, a Las Vegas-based mobile authentication platform.

“This old style of credit card merely requires a signature for authentication and they're vulnerable because an attacker only needs to copy the magnetic strip on the card using a simple device called a skimmer,” he said. “Once that data has been collected, a fraudulent replica card can easily be produced or the data from the magnetic strip can be used to make online purchases.