When traveling abroad, follow these three credit card rules
When I was in college, I traveled through Western Europe while studying abroad. I hiked the Alps in Switzerland, visited the British Museum in London and ate Belgian waffles in Belgium 鈥� which, by the way, are way better than the Belgian waffles in the U.S. I took a chartered bus with my wife, who was also studying abroad, from Paris to Rome.
As you might imagine, I wasn鈥檛 thinking about credit cards during that time. No one wants to think about credit cards when they鈥檙e traveling. But because I wasn鈥檛 thinking about credit cards then, I had to worry about them later. By the trip鈥檚 end, I had paid a couple of hundred dollars in foreign transaction fees 鈥� which was a lot, considering I was a poor student who didn鈥檛 spend much.
But if you want to avoid thinking about credit card stuff on vacation, or when traveling on business or visiting relatives internationally, you have to think about it beforehand. Here are three simple rules of thumb to follow before going on financial autopilot:
These three things won鈥檛 take up much time, but they聽could save you hundreds of dollars the next time you travel internationally.
1. Find a credit card with no foreign transaction fees.
When you鈥檙e traveling abroad, it doesn鈥檛 make sense to use a credit card that charges you an extra 1% to 3% in foreign transaction fees on every international purchase. But, of course, people do it all the time. Even I did it. It鈥檚 easy to overlook.
That鈥檚 why, before you travel internationally, you should take a second look at your cards鈥� terms. Make sure the ones you鈥檙e planning to use don鈥檛 charge foreign transaction fees. Even a card with a high rewards rate isn鈥檛 worth using abroad if it charges you an extra 3% on every purchase.
You can check your credit card鈥檚 fees by looking at your monthly statement, which usually includes a聽, the chart where issuers are required to list their rates and fees. Or, you could log on to your online account and navigate to the page that lists your card鈥檚 terms. If all else fails, call your issuer and ask. While you鈥檙e at it, let it know which days you plan to be out of the country. You don鈥檛 want to deal with false-alarm fraud alerts when you鈥檙e shopping for souvenirs in London.
If you don鈥檛 have a card without foreign transaction fees, apply for one. If you travel overseas at least once per year on average, you鈥檒l be better off with a travel rewards card that doesn鈥檛 charge transaction fees than with a cash-back card, a聽听蹿辞耻苍诲.
And if you鈥檙e studying abroad, as I was, consider applying for a student card that doesn鈥檛 charge these fees, like the Journey庐 Student Rewards from Capital One庐. Alternatively, you could ask your parents to add you as an authorized user to a fee-free credit card. You can also see whether your聽聽waives these charges.
2. Make sure your credit card will be accepted everywhere.
American Express and Discover still lag in international acceptance. If you want a credit card you can use everywhere, go with a Visa or MasterCard. These networks are larger, and the cards are accepted just about everywhere.
At this point, telling you to travel with a card that has an EMV chip might sound old hat. U.S. issuers began transitioning cards to EMV en masse last year, and the majority of U.S. cards now have chips. But it bears repeating: If the plastic you鈥檙e planning on using abroad doesn鈥檛 have a microprocessor on the front, ask your issuer for an updated card. Some merchants abroad no longer accept magnetic stripe cards, and you don鈥檛 want to be caught short in the checkout line.
If you want a card that鈥檚 accepted even more widely, look for one that鈥檚 chip-and-PIN enabled. Certain parking meters, kiosks and restaurants abroad will accept only these cards, which let you authorize payments with a four-digit PIN rather than with a signature, as the standard U.S. chip-and-signature cards do. Most聽U.S. cards aren鈥檛 chip-and-PIN enabled, but聽.
3. Pay with a credit card 鈥� not cash 鈥� whenever possible while abroad.
When you鈥檙e traveling abroad, pay with a no-foreign-transaction-fee credit card whenever you can. You鈥檒l be able to get a fair exchange rate every time and earn rewards.
Cash might feel like the safe choice, but in reality, it isn鈥檛. If you鈥檙e pickpocketed while carrying hundreds of dollars鈥� worth of currency in your wallet, you鈥檙e never going to see that money again. If your credit card is lost or stolen, you won鈥檛 be liable for fraudulent charges, and usually your issuer can expedite a new card to your hotel. A backup card could hold you over in the meantime.
Opting for cash over credit isn鈥檛 just less secure; it can also be more costly. Unless you order the money from your bank, or have a no-foreign-transaction-fee debit card and use it at an in-network ATM, you might end up paying high fees and getting a less-favorable exchange rate. And getting cash out of the ATM with your credit card 鈥� something I鈥檝e done while traveling 鈥� is even more expensive. You鈥檒l have to pay a cash advance fee, in addition to cash advance interest that starts accruing on the day of your transaction.
Keep your spending down by setting weekly or daily spending limits and planning out your traveling itinerary ahead of time.
Relax 鈥� You got this.
Though I don鈥檛 travel internationally often, I鈥檓 considering a trip abroad next year. And when I make my plans, these three rules of thumb will be top of mind, because I don鈥檛 want to think about credit cards while I鈥檓 on vacation.
I mean it.
I鈥檓 not counting the points I鈥檓 earning on every purchase, or trying to meet a minimum spending requirement and earn a sign-up bonus. You won鈥檛 find me paying with a different credit card for every purchase to earn more rewards. That鈥檚 just not my idea of a fun trip. If you feel the same way, let me assure you: It鈥檚 possible to make good credit card decisions abroad without having to obsess over all these details.
Traveling is all about meeting new people, eating new foods and exploring new parts of the world. Making good credit card decisions in the meantime is important 鈥� but it doesn鈥檛 have to take much effort.
Sean McQuay is a credit cards expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards more effectively.
This article first appeared at .
