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Credit cards offer a convenient and safer alternative to carrying large amounts of cash abroad. Some credit cards even provide rewards and privileges you can use during traveling.
However, there are still some things to keep in mind to make your traveling experience less expensive and stressful.
Using Credit Cards Overseas: Consider It Before Departure
When preparing for your journey, there are several things about your credit cards to consider:
- Check your card Expiration Date – This might not be the first thing on your mind when traveling abroad. However, it is important to remember that if your card expires, you can not use that card for any payments or cash withdrawals from ATMs. So if your card is set to expire soon, it might be a good idea to renew it or take another credit card some months before it expires.
- Order foreign currency online – One of the ways to make your traveling experience more convenient and save some money is to order foreign currency online. Most banks, including Wells Fargo, allow you to order foreign currency on the internet at reasonable rates. This might be a better option than exchanging money at the airport.
- Check if credit cards are widely accepted in the city of your destination – It is true that as years go by, credit cards are more widely accepted. However, there are still some countries and small cities where most merchants do not still accept them. For example, being limited to 2-3 businesses to spend your money on can be very frustrating, so it is important to check whether or not your credit card is widely accepted where you are heading.
- Few Banks Require A Notice – While most banks don't require it, few financial institutions require notification from you that you are about to depart abroad. It may be the case if you have a secured or student card, or alternatively if you need to active special insurance such as rental car insurance.
In most cases, you do not have to call the bank. Instead, you can notify them via online or mobile banking application. This requirement is meant to protect your credit card account from fraud.
Smart Use of Credit Cards Abroad: Best Tips
Once you depart to the place of your destination, there are still things you can do to reduce your travel costs and earn some rewards as well. Here are some tips:
1. Pay in Local Currency
As the Citibank website explains, when you pay for goods and services abroad, sometimes you will have a choice to pay in the local currency or your home currency. Some people might pay in US dollars, in their home currency, which might seem more convenient.
This is known as Dynamic Currency Conversion or DCC. However, the exchange rates, in this case, are likely to be poor and certainly not to your advantage. Therefore, Citibank and other financial institutions advise their clients to pay in foreign currency when this choice is offered.
2. Enjoy Credit Card Travel Rewards
Some credit cards, especially luxury cars, have many benefits for their customers.
For example, some offer their customers cashback on hotel and flight expenses. At the same time, some cards provide access to airport lounges, which can make your travel more comfortable. So it is worth checking whether or not your credit card offers one of those benefits and, if it does, to take advantage of it.
2X 2X miles per dollar on every purchase, plus 5X miles on hotels and rental cars booked through Capital One Travel
2X – 5X 5x total points on travel purchased through Chase Ultimate Rewards, 3x points on dining and online grocery purchases and 2x on other travel purchases. Plus, earn 1 point per dollar spent on all other purchases
1X – 10X 5X total points on air travel and 10X total points on hotels, car rentals when you purchase through Chase Ultimate Rewards®, immediately after earning your $300 annual travel credit. Also, earn 3x points on dining at restaurants and travel (after meeting the $300 travel credit), then 1x points per dollar spent on all other purchases
1X – 5X 5X points on up to $500,000 spent on directly-booked airfare and flights and prepaid hotels booked through American Express Travel (per calendar year), 2X points on prepaid car rentals through American Express Travel and 1X points on all other purchases
3. Earn Credit Card Cashback and Points
It is worth remembering that a number of credit cards offer five or even ten times more points when you spend your money on hotels and airline tickets. Some credit card companies extend this benefit to restaurants as well, so if you consider a travel card – check out and compare the benefits.
Some credit cards also allow you to earn extra points when you spend money on regular purchases abroad. Later you can redeem those points for rewards and save some money.
Southwest Rapid Rewards Plus
1x – 2x 2X points on Southwest purchases, Southwesthotel and car rental partners, local transit and commuting (including ride-shares),internet, cable, phone and select streaming services, and 1X points on all other purchases
American Airlines AAdvantage MileUp℠ Card
1X – 2X 2 AAdvantage miles per dollar on grocery stores and eligible American Airlines purchases, and 1 mile per dollar on other purchases
1X – 2X 2x per $1 spent on United purchases, hotel accommodations, restaurants & eligible delivery services and 1x per $1 spent on all other purchases
$95 ($0 first year)
4. Always Have Some Cash at Hand
You might have a widely accepted credit card. However, for some technical or other reasons, it might not work. There are also still some merchants abroad who only accept cash.
Therefore, it might be prudent to bring some cash with you. This amount can be in US dollars; alternatively, you can exchange the currency before your departure, saving some money on conversion fees.
5. Avoid Foreign Transaction Fees, If Possible
The fact of the matter is that some credit card issuers charge up to 3% foreign transaction fees. For example, if you spend $3,000 abroad with your credit card, you must pay a $90 fee.
If you travel frequently, this expense can add up to a considerable amount. Fortunately, there are several credit cards with no foreign transaction fees, so it might be better to choose one of those when traveling.
Foreign Transaction Fee
Hilton Honors Card from American Express
3X – 7X 7X Hilton Honors Bonus Points for each dollar of eligible purchases charged directly with hotels and resorts within the Hilton portfolio, 5x points at U.S. restaurants (including takeout and delivery) U.S.supermarkets, U.S. gas stations and 3x points for each dollar on other eligible purchases
JetBlue Plus Card
1X – 6X 6X points on JetBlue purchases, 2X points at restaurants and grocery stores and 1X points on all other purchases
The World of Hyatt
1X – 4X 4 bonus points per $1 spent for Hyatt stays and experiences including restaurants and spas, 2x for flights purchased directly from the airline, local transit, commuting, restaurants, fitness club, gym memberships and 1 bonus point per $1 spent on all other purchases
6. Make Use of Travel Protections
Most credit cards offer travel protections. The Platinum Card® from American Express card comes with trip cancellation, trip interruption, and trip delay insurance. With Chase Sapphire Reserve, you can get compensated if your trip is canceled or cut short by sickness, severe weather, and other covered situations, you can be reimbursed up to $10,000 per person.
For example, if your flight got delayed or you lost your baggage, the credit card company might pay you some compensation for your losses. Therefore, it is worth checking whether or not your credit card issuer offers such benefits and, if it does, to take advantage of those policies.
Things to Avoid When Using Credit Card Overseas
- Using ATMs abroad – It is well known that using a credit card for cash withdrawals while at home might not be in your best financial interest. After all, cash advances have some steep fees and high-interest rates.
This remains true when you are abroad as well. The only difference is that the owner of the ATM you will use might charge additional fees as well. As a result, you might have to pay around 5% in fees to withdraw your money. It is better to take some cash with you to avoid those fees.
- Exchanging money at airport kiosks – Most airport currency exchange kiosks offer you to buy foreign currency not only in cash but you can also pay for it with your card. This might be convenient for most people.
However, the downside here is that the exchange rates at those places are usually not competitive. In fact, according to Oanda, the typical kiosk rate can be around 5% higher than the market rate. If you buy $2,000 worth of foreign currency, you will pay $100 more than the market rate.
- Not using air miles when purchasing travel tickets – It is easy to forget to use your airline miles when buying tickets. However, the best airline credit cards offer you 5 or 10 times more points for travel expenses. Therefore, if you are a frequent traveler, those points could add up to a significant amount.
As a result, you can redeem those points and use them to save money on airline tickets. If you ignore them, points will eventually expire, and you will miss an opportunity to redeem them. You can redeem points with United, American Airlines, Delta and many other airline partners.
When it comes to credit cards, those issued by Visa and MasterCard are widely accepted across the world. Although, there are still some countries and small cities where it might be challenging to find a location that accepts them.
In contrast, American Express and Discover cards are not as widely accepted as Visa and MasterCard. At the same time, those two companies keep up with their efforts to expand their presence across the globe.
Yes, you can use a credit card abroad. However, with some banks and credit card companies, it is required to inform them about your travel plans. Otherwise, they might suspect fraud and decide to block your card temporarily.
To make the process easier, now most banks give you an option to inform them about your departure by online or mobile banking. Therefore, you do not need to make a call or visit the branch.
That depends upon an individual’s preferences and financial circumstances. Generally speaking, many people find it convenient to use their credit cards when traveling rather than carry large amounts of cash. The main reasons here are security and convenience.
At the same time, some people prefer using debit cards instead, which is also a viable option for traveling.
Most countries accept Discover cards in North and South America, Europe, East Asia, and Australia.
However, it is worth mentioning that the discovery cards are not accepted in the majority of African countries, as well as in some Eastern European countries
Capital One cards can be used internationally. Capital One has a range of credit cards specifically designed for frequent travelers. They let you earn more points on travel tickets, hotels, and restaurants.