5 Tips for Using Your Credit Card Overseas
You're probably used to using your credit card when shopping or eating out at home, especially if you're accustomed to earning rewards such as cash back, miles, or points. But now that you're ready to travel internationally, you may feel a little less confident about your normal shopping habits. Will your credit card charge you foreign transaction fees every time you use it, and chip away at your vacation budget? What if your card gets declined? And isn't it easier to just pay cash anyway?
Cash may work for incidental expenses such as tipping, but you'll still want to use a credit card for hotel, car rental, and other large expenses. That's because paying for purchases using a credit card with no foreign transaction fees while traveling overseas can help you save money, maximize rewards, track spending, and more. But before you board, research your credit card options for international travel carefully, because not every credit card offers comparable benefits.
1. Compare cash to credit for overseas spending
Currency exchange fees can affect your spending power when you travel overseas – especially if you're likely to spend more because your trip will last for an extended period of time, or if you're visiting an expensive destination. Your credit card can make spending convenient for most purchases, and it may save you money on foreign transaction fees, too.
In case you want to keep cash on hand for smaller expenses, it pays to plan ahead. Your bank may be able to exchange U.S. dollars for foreign cash, but plan the swap several business days in advance of your departure; your bank may not have the currency you need if you seek an exchange at the last minute. You may be required to pay a fee to make the exchange. Because this fee is often a percentage of the amount you wish to convert, exchanging a large sum could cost more than you planned to spend. If you use a credit card with no foreign transaction fees to make purchases while traveling overseas, you could save on these fees and possibly earn rewards from those purchases at the same time.
Other options include currency exchanges at airports and hotel kiosks, and making withdrawals at an ATM. But while these locations offer speed and convenience, they may be more expensive than the bank. Pay attention to the advertised fees, and limit transactions at these locations – especially if credit cards are commonly used at your destination.
2. Managing foreign transaction fees
When it comes to international purchases and travel, the benefits offered by credit card issuers vary greatly. The credit card you count on at home for its amazing cash back rewards might not be the best option for your upcoming overseas adventure. Before you use your credit card, understand how your credit card company may apply foreign transaction fees. Unless your issuer waives these fees, you could wind up paying more for your purchases than the advertised price – and those fees could add up fast if you plan to use your credit card for your hotel or car rental.
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. If your credit card issuer charges a foreign transaction fee, consider applying for a travel rewards credit card that waives these costs.
3. Using your credit card abroad
Many card issuers transitioned customers to chip-enabled credit cards. American consumers are just getting used to dipping their cards instead of swiping, but in Europe and elsewhere, shoppers have been dipping (and possibly entering a PIN) for years. That means you'll need to make sure your credit card has a chip before you depart, since foreign checkout clerks may not know what to do with a mag-stripe card. If you have a mag-stripe credit card or a chip-enabled card, keep local currency with you at all times. Unattended payment kiosks in locations such as parking garages or tollbooths, for example, may not accept these cards.
You should also be prepared in the event a merchant declines your credit card. If this occurs, you have plenty of available credit, and your account is otherwise in good standing, then fraud protection may be the cause. If you normally make in-person transactions in Louisville and it's your first visit to London, you could experience a declined transaction – and even a locked account. Call your credit card issuer in advance of your journey to help prevent inconvenience and embarrassment. You may be able to avoid unnecessary disruptions by alerting your credit card issuer of your travel plans, whether abroad or domestic.
It also can't hurt to verify that locals at your destination use credit cards regularly, especially if you're traveling off the beaten path.
4. Earning rewards on overseas credit card spending
Are you excited to use your credit card overseas because you're anticipating earning plenty of rewards? Read the terms and conditions before you go, as your credit card issuer may only award points, cash back, or miles for domestic spending
5. Check your credit card perks
In the excitement of planning an overseas trip it's easy to forget other ways your credit card might help you. Access to members-only airport lounges and early boarding may be some of the amenities that can help you relax at the same time.