Traveling with Credit Cards

Credit cards are usually the cheapest and safest way to pay while traveling, as long as you avoid two traps: foreign transaction fees and dynamic currency conversion. Bring a card that charges no foreign fee, always choose to pay in the local currency, and pack a backup card from a different network. Those three habits cover most of what goes wrong.

Before you go

Check your card’s foreign transaction fee. Many cards add a fee of up to 3% to every purchase made abroad, or made online with a foreign merchant. On a $3,000 trip, that’s $90 for nothing. If you travel even once a year, a no-foreign-fee card is worth having. The fee is listed in your card’s rates and fees table.

Bring two cards on different networks, like one Visa and one Mastercard, from different banks. If one is blocked for fraud or isn’t accepted, you still have a way to pay. Keep them in separate places.

Update your contact details and turn on alerts. Many issuers no longer require a travel notice because their fraud systems use your phone’s location and purchase patterns, but some still let you add one. More important: make sure the issuer has your current mobile number and that app notifications are on, so you can approve a flagged purchase in seconds.

Save the issuer’s international phone number. The number on the back of the card may be toll-free only in the U.S.

Check your card’s travel benefits. Some cards include rental car coverage, trip delay or cancellation insurance, or lost luggage coverage. Read the terms: coverage often applies only if you paid with that card, and rental car coverage may be secondary to your own auto insurance.

At the register: always pay in local currency

Abroad, a card terminal or ATM may offer to charge you in U.S. dollars. This is dynamic currency conversion, and it’s almost always a bad deal. The merchant’s processor sets the exchange rate, and Visa says the markup is often 3% to 5%. Choose the local currency, such as euros, pesos or yen, and let your card network do the conversion at a better rate.

If you chose local currency but the receipt shows dollars, ask the merchant to redo the charge, or contact your card issuer to dispute it.

Holds and deposits

Hotels and rental car companies often put a hold on your card for more than the expected bill to cover incidentals. Gas pumps may do the same. Holds can take several days to drop off and reduce your available credit in the meantime. Use a card with plenty of room, and avoid using a debit card for these, since the hold ties up your actual cash.

Getting cash

Don’t use a credit card at an ATM. A cash advance typically comes with a fee and starts collecting interest immediately at a higher rate, with no grace period. Use a debit card instead, ideally from a bank that doesn’t charge foreign ATM fees or reimburses them. At the ATM, decline the offer to convert to dollars too.

If your card is lost, stolen, or blocked

• Lock the card in your app right away, then call the issuer’s international number.
• Ask whether they can send a replacement to your hotel, or offer emergency cash.
• Switch to your backup card.

With a credit card, federal law caps your liability for unauthorized charges at $50, and most major issuers waive even that. Credit Card Security and Fraud Prevention covers the rest, and What to Do When Your Credit Card Is Declined helps if a card stops working mid-trip.

Earning on the trip

If you travel often, a travel rewards card can earn points or miles toward future trips. Only use one if you’ll pay the balance in full, since interest quickly cancels out rewards. Understanding Credit Card Rewards Programs explains how to compare them.

Sources

• Visa: Decoding dynamic currency conversion
• Experian: What is a foreign transaction fee?
• Experian: Balance transfer vs. cash advance
• FTC: Lost or stolen credit, ATM, and debit cards

This article is for educational purposes and is not financial advice.