4 Tips for Using Credit Cards Overseas

What you should do before you leave and while you’re away

Reviewed by Samantha SilbersteinFact checked by Betsy PetrickReviewed by Samantha SilbersteinFact checked by Betsy Petrick

While you’ll always need some cash, using a credit card for your spending needs can significantly simplify overseas travel. You won’t need to deal with converting currency, and armed with the right credit card; you won’t pay unnecessary foreign transaction fees.

Also, pickpockets will be less of a threat, because credit cards are easier to conceal and keep safe and because even if your card is stolen, you won’t lose money. Just report your card missing, and you’ll be off the hook for any unauthorized purchases.

Still, the act of using a credit card does not in itself make overseas spending cheaper. By following these four tips before you leave and while traveling, you can make that goal a reality.

Key Takeaways

• Credit cards simplify spending while traveling, as cash can be clunky, conversion rates tricky, and cash is prone to loss or theft.
• If a credit card is stolen, it can be suspended and replaced quickly.
• Make sure you understand your card’s international fees and restrictions.
• Use a card that does not charge foreign transaction fees.
• Tell your card issuer of your travel plans in advance so they don’t assume that your card has been stolen and used without your consent.

1. Use a Credit Card With No Foreign Transaction Fee

Many credit card issuers charge fees for purchases made overseas with a foreign merchant. These foreign transaction fees typically range from 2% to 5% of the purchase amount. As a result, you can pay significantly more than the listed price of your purchases overseas, which can really add up throughout a trip.

Before you depart, check your credit and debit card agreements to see if they include such fees. If they do, then apply for a credit card with no foreign transaction fee and for a debit card that does not charge extra for ATM withdrawals in other countries. Make sure to apply far enough in advance to allow for approval, account setup, and receiving your new card in the mail.

Important

Foreign transaction fees can also apply to purchases made online from your home country where the vendor is foreign and processes the transaction in its local currency. Keep this in mind when you book hotels and day trips before departing.

2. Call Your Credit Card Issuer Before Leaving

Once you have the requisite cards, alert the issuer of your travel plans and ask for the number that you can call collect for assistance while overseas. This will not only ensure that your cards do not get suspended because of suspicious activity but also give you a way to contact your issuer free of charge if something comes up.

Some card issuers no longer need cardholders to alert them to upcoming travel. For example, American Express uses fraud technology to help recognize when cardholders are traveling. Amex recommends keeping your contact information updated in case it needs to contact you while you’re away. Be sure to check with your credit card company before you leave to see if notifying them is necessary.

3. Avoid Dynamic Currency Conversion

Make sure to avoid dynamic currency conversion, a credit card feature that allows you to make a credit card purchase in a foreign country by using the currency of your home country. Some of us tend to have trouble relating foreign currency to the U.S. dollar, at least off the top of our heads, while shopping.

Foreign merchants take advantage of this fact at the checkout counter by offering to quote the final price in U.S. dollars and, unbeknownst to tourists, making that conversion at an uncompetitive exchange rate.

Avoiding these unnecessary costs is quite simple. All you need to do is refuse to sign any check or receipt not expressed in the local currency.

If you’re worried about deciphering the cost of meals and goods during your trip, just brush up on conversion rates before leaving or download a mobile app to your phone that will make the calculations for you.

4. Memorize Your PIN

With the institution of chip-and-PIN technology, some credit card terminals—particularly those in Europe—require the cardholder to enter a personal identification number (PIN). Make sure you have one set up and memorized before you leave town.

Merchants in some countries still use the less sophisticated magnetic stripe system. As a result, merchants in these markets may not accept your credit card if you don’t have proper identification. As long as you carry your passport, you should be fine. Merchants simply want to be able to verify that the person using a credit card is actually the one authorized to do so.

Note

Chip cards, also known as EMV cards, were designed to enable secure payments and were first introduced in Europe in the 1990s. The United States only started fully rolling out chip cards in the last several years.

Do Credit Cards Charge a Fee When Used Overseas?

It depends on the credit card. Some credit cards will charge a fee overseas, while other cards will not. Confirm with your credit card company what kind of fees, if any, will be charged if the card is used abroad. Also, understand that some retailers will not take an international credit card unless it is an American Express, Visa, Capital One, Mastercard, or Discover card.

Do Credit Cards Automatically Convert Currency?

Yes, credit card companies automatically convert foreign currencies to the domestic currency using their exchange rate. When you look at your card statement, the amount charged will be in the domestic currency.

Do I Need to Tell My Credit Card Company I Am Going Abroad?

You do not necessarily have to tell your credit card company that you are going abroad in order to use your card internationally. Your card will usually work, but there is a chance that transactions may be blocked, particularly for large amounts. It is always prudent to let your card company know you will be abroad and when to ensure your charges will not be blocked.

The Bottom Line

While overseas travel can be both confusing and expensive, there are ways to minimize the cost and hassle of spending abroad.

As long as you have a credit card with no foreign transaction fees, notify your credit card company of your travel plans, and only pay for purchases expressed in terms of the local currency, you should be able to avoid post-trip credit statement surprises.

Ultimately, a trip overseas shouldn’t be characterized by worries over conversion rates and handling foreign money. So get the right cards before leaving and let your focus to shift to its rightful place: having a good time or getting down to business.

Read the original article on Investopedia.