Market Overview

Credit Card Tips When Travelling



Recent studies by the U.S. Travel Association show that an 30 million Americans are traveling overseas each year, and that they expect this number to continue to grow.  But traveling abroad can make even the most simple purchases difficult.  Having to exchange your local currency can become complicated (and expensive), especially in cases where you are travelling to multiple countries on the same trip.  Credit cards can go far to help simplify this process, as most countries accept popular credit cards from companies like Visa and MasterCard.  These cards do most of the work for you, automating the process and (hopefully) giving you a better exchange rate at the same time. 

With credit cards, you will not need to carry out unsafe practices like carrying around wads of cash, and you will not have to use as many traveler’s checks.  Credit cards also allow you to track all of your purchases, which makes it easier to monitor your spending.  But trips abroad can also carry some added risks.  Here, we will look at some ways to stay cautious and protect yourself from any financial harm that might otherwise be seen when travelling to another country. 

Contact Your Credit Card Company

First, it is important to contact your credit card company and tell them you will be making purchases from another location.  Purchase activity in other areas of the world can quickly light warning signals for credit card companies -- and a hold might be placed on your card.  Not exactly convenient when you are in an unknown location.  Calling your credit card company in advance can help avoid some of these problems.  This will also keep you protected if purchases are seen in countries that are not part of your travel plans, as the Fair Credit Billing Act can also be applied to overseas purchases.

Watch for Transaction Fees

Many credit card companies will charge foreign transaction fees (usually around 3%).  This could come to a significant expense when hotels, restaurants, shopping, and other expenses are taken into consideration.  Some companies have structured card agreements, however, that limit (or even eliminate) these foreign transaction fees.  Websites like allow borrowers to compare credit cards and find offers that can be used to benefit frequent travelers.  This is usually a much better route to consider (rather than paying in local currency withdrawn from an ATM) because credit card companies tend to give much better exchange rates than what is seen at local dealers.  In any case, it always helps to know your card fees in advance so that you are not surprised by an excessively large bill at the end of the month. 

Always Have a Backup Card

Since travelling abroad opens up the potential for uncertainty, it always makes sense to have at least one backup credit card with you at all times.  If, for some reason, your card stops working while you are abroad, it might be very difficult to get your credit card company to issue you a new card because you are not at your home address.  Even if your credit card company is willing to send you a replacement through express mail, you will still have periods of time where you might not have access to cash.  This could complicate things at your hotel, and even make it impossible for you to buy daily necessities.  For these reasons, having a “safety card” in your hotel room has clear benefits and can help protect you in cases where your purse or wallet is lost or stolen.  But, in these cases, it should be remembered that having a card issued by a different bank is what will offer the most security, as it will have no direct connection to your primary card.

Keep Diversified

Last, always keep in mind that while credit cards offer some excellent benefits when travelling abroad, you should not choose to rely on them exclusively.  Remember to keep at least some cash (and even travelers checks) on hand to protect against any uncertainties that might arise.  Sometimes, foreign merchants will actually give additional discounts for cash purchases so you will want to be able to take advantage of these deals should they arise.  At the same time, however, cash should not be thought of as your primary payment method as it is less secure than a credit card and typically involves unfavorable exchange rates in comparison.   Keep diversified, keep protected, and you will be able to focus on the more pleasurable aspects of your trip.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Personal Finance


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