4 Tips to Consider When Using Travel Credit Cards Overseas

It's pretty much a no-brainer to pull out your credit card at home when shopping or eating out. But what about when you're traveling–internationally, no less? Many of us may feel a little less confident. While some vacationers swear by the convenience of using their credit card for everything, just as many feel more secure exchanging money as they go, offering a credit card only at the hotel front desk.

What is the best way to pay for purchases on vacation? Consider these four factors and travel credit card tips before you go:

Exchange Rates

One of the perks of using credit cards over cash when you buy something overseas is that you usually save money. When you swipe a credit card, you get an exchange rate that is automatically adjusted to market conditions. If you use cash, you have to take into account the cost of making the exchange. Banks usually charge a fee to convert currency; currency exchange businesses in tourist areas and airports almost always charge the most.

Foreign Transaction Fees

Before you start to use your credit card all day every day abroad, understand how your credit card company may apply foreign transaction fees. International transaction fees can add up to be very costly, from $1 to $1.25 each depending on the lender, or a percentage of the transaction, says Bruce McClary, Vice President of Public Relations and External Affairs for the National Foundation for Credit Counseling (NFCC). How do you know whether your credit card charges foreign transaction fees and, if so, how much? Check the website or call your card issuer and ask. Some issuers offer no foreign transaction fee cards, but others charge per transaction.

Account Disruptions

If you decide to use your travel credit cards on your trip, even if you're only traveling domestically, McClary advises notifying your card issuer to let them know of your travel plans to avoid any interruptions in service if the issuer sees activity in a location that's unusual for you, be it across the country or across the globe. (Even so, it may be wise to bring a second card along as a backup.)

Using Cash

So is it a smart move to use a travel credit card for everything overseas? Almost everything. You're still going to want to have some cash on you, for street vendors and marketplaces, tips, and small purchases like a bottle of water. You can exchange currency at your bank before you leave, but call ahead. Some only exchange certain currencies or have a minimum and maximum amount they'll exchange. Many travelers simply withdraw money at an ATM at their destination, where you may get a better exchange rate over using a currency exchange service at your destination, even after ATM fees are taken into account.

Now you can relax and enjoy that well-deserved vacation!

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