Credit Card Considerations for Expats and International Travelers

Credit Card Considerations for Expats and International Travelers

As internet communications and social media outlets enable quick access to co-workers and family members anywhere around the world, an increasingly large number of Americans have decided to take extended vacations at overseas locations.  Lower housing prices abroad will also lead a larger and larger number of people to actually set up residencies in foreign locations.  So, for avid world travelers, or those considering (or have already completed) a move abroad it is important to know which credit and debit cards are best suited for foreign transactions.  Here, we look at some options to consider when Americans look to make credit transactions overseas.

Transaction Fees

Perhaps, the most important factor to consider deals with the foreign transaction fees that are usually charged on every purchase.  Typically, a 3% fee is charged every time you use your credit card abroad.  For debit cards, this can be even worse as the 3% fee could be added to additional charges from both the foreign and domestic banks you are using.  But, with a little planning, there are ways to avoid fees in both cases. 

Options for Expats 

For many, Capital One bank is thought to prey on customers with low credit scores, offering unhelpful customer service, and having high interest rates for their cards.  But in terms of international transaction fees, their cards stand high above most alternatives.  Most of the other cards that have no international transaction fees require higher interest rates in order to make up for the cost (including the 1% fee charged by Visa and MasterCard).  Check out a list of available Capital One cards here.  “Some of the cards with no international transaction fees do require a higher credit score before approval but there are still options available for those with lower credit,” said Anna Cohn of BestCredit.net.  “A better choice in this case might be the Student Rewards card or a secured credit card.” 

As always, it is best to pay off your bill in full each month in order to avoid the elevated interest rate fees.  One additional drawback is the fact that Capital One cards are somewhat “technically-challenged,” in that they to not possess EMV chips.  This means you will have to manually swipe the card at every transaction and enter the CVV code (which is found on the back of the card).  This can be more time consuming and it removes some of the advantages seen when using the card in countries with EMV pay terminals.

Combining Benefits

The best choices, however, will always be the ones that combine a number of benefits into one package.  For example, if you are able to find an offering that has an EWV chip and gives rewards benefits for frequent flyers (a highly valuable offering for those travelling to many countries).  Chase Bank has an offering like this made available through its partnership with British Airways, but note the $95 annual fee that is incurred through its membership.  In any case, it does make a lot of sense to combine rewards and benefits, as there are many banks that can cater to borrowers in a number of different ways. 

Common Restrictions

Other things to watch for are the common restrictions that many banks impose.  For example, card agreements from Schwab Bank require borrowers to open a brokerage account.  More commonly, there will be requirements to tie your savings or checking account to your credit card.  This can have the added convenience of paying all your bills at once (through one outlet) but this can be inconvenient if you are not prepared to open an entirely new bank account.  So, it makes sense to weigh all of the benefits in relation to the potential drawbacks (and inconveniences) that will be required before committing to any agreement. 

Online Customer Service

Finally, you will always need to have quick access to customer service from any location.  With many banks now offering online chat for customer service, it makes sense to consider this as a substantial benefit, given the potential costs incurred when making international phone calls.  24-hour access is another important factor to consider, given the fact that international time zone differences can make it difficult to talk to your card provider at a time when it is convenient for you.  Online chat options have grown in popularity, so many now look at offerings like this as a way to ensure that the bank is looking to provide the most up-to-date options for clients.