Credit Cards

Using Your Credit Cards Overseas: What You Need to Know

If you are planning a trip out of the country, you are inevitably going to have to rely on your credit card at some point. That is because using your card is generally much safer and easier than walking around with cash. However, before you start swiping your card in a faraway land, there are a number of things you should know first.

Some of these tips are probably obvious already. Yet, a few others may not be and it is best you were aware of them now instead of later on — when you have no choice in the matter.

Therefore, here are some of the most important things you really must know before you start using your credit card abroad.

Foreign Transaction Fees

You took your time. You shopped around for your credit card. You probably looked over all of the fees and rates that came with the card before you applied. Nestled in with that fine print it something you may have overlooked.

That is the “foreign transaction fee”. It’s on the menu of fees and costs for owning the card. Maybe you have not thought much about it before. Now you have decided to take a trip overseas. Thus, it is something you need to be cognizant of as you start to spend.

That fee is an additional charge that the credit card issuers. Networks impose them on users for every transaction that is completed in a foreign country. For most cards, it is either a percentage or a flat fee whichever is higher for each transaction.

The percentage is typically 3% with most cards. It is a hassle to be expected to pay a little more for using your card abroad. It is a practice that the credit card industry is starting to do away with. Yet, plenty of cards still levy the fee on their customers.

Why Are You Paying this Fee?

Is your card is charging you a foreign transaction fee for purchases across the pond? You may be wondering why. It sounds relatively straightforward by its description. Yet, why is it your responsibility? Who are you giving that money to each time you buy something with the card abroad?

The simplest answer is conversion. When you spend money in a foreign country the banks requires conversion. They must convert your U.S. dollars into the currency of the region where you are making the purchase. Converting that currency costs money. Thus, your card issuer or network is making you pay for that service. It is done by way of a foreign transaction fee.

Additionally, fraud is an inevitable part of the equation as well. This is because there are inherent risks. These come with conducting this conversion for an international transaction. Therefore, the fee is there to cover the expenses. That is an addition to the potential risk of completing each purchase you make overseas.

As for the fee itself, that 3% is going toward paying off two separate fees. The one imposed by the payment network being accessed to complete the payment. Plus, there’s the requirement of the bank that issued you the card. The fees and their breakdown are different between Visa and MasterCard and American Express. That is due to the fact that they do not work on the same payment network systems.

The best way to avoid this fee is by owning an international credit card. Find one that doesn’t impose the foreign transaction fees. It lets you spend around the world without getting charged extra to do so.

Cash Advances

Perhaps you need to use your credit card to get cash and do not have a debit or ATM card. In that case, you will need to get a cash advance. Now you are looking at cash advance fees. Though, think about the cash advance annual percentage rate (APR) when you withdraw that money.

The fees alone on each transaction can get as high as 5% per withdrawal or a flat fee. They go with whichever is greater. That fee is on top of the transaction fee that the bank who owns the ATM you have chosen to use will charge you.

Now, you have been charged the card’s cash advance fee and the ATM fee. Then, there’s the APR. You are going to get charged interest on that cash. It is almost always higher than the APR you are getting purchases and balance transfers.

For some cards, the cash advance APR can get as high as 29.99%. You can avoid paying that interest if you pay off your balance in full when the statement arrives. However, if you do not, you are going to be paying a lot of money just to withdraw cash from your credit card.

Dynamic Currency Conversion Practices

When you are in a foreign country, prices are going to be listed in the local currency. It can be confusing to figure out what that price equals in U.S. dollars. Foreign merchants are aware of this. Thus, many of them now provide a service.

They will charge your card in U.S. dollars instead of the local currency. This is called dynamic currency conversion. Many retailers will tell you that this is a great way for you to avoid the fee for converting currency on the transaction.

What they do not tell you is that the exchange rate is nowhere near the market rate. Thusly, you will end up paying much more for the purchase. They upsell this practice because they pocket a healthy commission for every transaction processed through this method.

What are you paying for in addition to the service that is being provided to you? All of your transactions will be listed in U.S. dollars on your statement. Some consumers prefer it so they can read their expenses easier on their statement. Yet, why pay someone to help you convert the currency for you? Do a little math on your own. Save the money.

Let us say, you are presented with this service by a retailer. They are required by law to allow you the ability to decline and run the charge normally. Though, be careful. Some merchants may not comply with the mandate. They will charge you for the conversion anyway. Check your statement after the fact. If there is a problem, file a dispute immediately.

Accepted Everywhere

Before you take off, you want to ensure your card is widely accepted where you plan to travel. Perhaps you have more than one card from the various networks. In that case, you should be well-covered if a merchant doesn’t accept a certain card. However, maybe you only have one card. That is the one you only plan on just. Then, it is important to know which one is going to be the most useful to you.

Visa is your best bet all around. It is accepted everywhere in the United States. Additionally, it has the widest reach around the world as well. MasterCard is also very popular. Yet, many foreign retailers do not accept it as much as Visa.

American Express is your next best bet. It is not accepted everywhere in the U.S. Additionally, you may come across some merchants who do not take it internationally either. Discover is still the smallest network among the four major cards. Much like in this country, the card is not welcomed everywhere abroad either.

Fraud Protection Protocols

Perhaps you are are having a great time in Portugal. You enjoy the shopping and dining. However, it’s time to pay the bill at the restaurant. To your dismay, the card is suddenly declined.

That is impossible. That is because you know you are up to date on your bill payments. You are nowhere near reaching your credit limit. Panic sets in. Then, you realize that you are in a foreign country without a way to pay for anything.

Why did this happen? You have your card’s eagle-eye fraud protection protocols. The ones that sounded so great when you applied for the card have just kicked in. That is because the issuing bank has detected numerous charges. They see it’s in some foreign country where the card has never been used before. The bank likely thinks your card or the number has been hacked. They believe some identity thief is enjoying a vacation on your dime instead of you.

Many banks are on heightened alert for fraudulent activity. Let’s say their network even suspects some fraudulent activity on the account. Thusly, they will freeze it to avoid further activity.

Most issuers will not make you responsible for unauthorized charges. They’re the ones who have to absorb those losses. This is their way of limiting their exposure to fraudulent transactions.

Yes, this is extremely inconvenient and even embarrassing. You can prevent this from happening. It is a good idea to reach out to your credit card company. Make them aware that you will be traveling abroad. Therefore, any charges made from some faraway exotic locale are being made by you and not some hacker.

This sounds ridiculous, alerting your credit card company that you are going on vacation. Yet, that’s the world we live in now. It is unfortunate. Though, it is also better to be safe than sorry. You do not want to have your credit card shut down unexpectedly while you are thousands of miles away from home.

There is a great idea before you depart. Get in touch with customer service to let them know where you are going to be traveling. Make sure you give them the information for every leg of the trip. That includes any locations. Advise them of any airports where you will be spending a short period of time.

That includes a layover between flights. You may make a purchase in a region that you did not include when you contacted your bank or card company. That might trigger a hold since. That is because as far as they know, you weren’t expected to be in that place.

That’s something to keep in mind. This is mainly recommended for Visa and MasterCard users. That is because American Express won’t require you to notify them of your international itinerary.

Their protocols work somewhat differently. Perhaps you forget to reach out to your credit card issuer and the account is frozen. In that case, you can always call customer service. Let them know everything is okay. Ask them to release the hold. That may not be immediate, so be careful.

Know Your Perks

Every credit card has some kind of customer service assistance program. Though, some are more comprehensive and wide-ranging than others. Most of them typically come with purchase protection, travel plans insurance, and lost luggage protection. They also probably include roadside assistance, and car rental damage insurance, among others. Your card can act as a safety net and lifeline if you find yourself stranded or worse in a strange land.

However, you can’t really access that assistance if you do not know that you have it. Therefore, make sure you are well-apprised of all the benefits and services available before you depart. This way you can call for help in the event something does happen. It’s crucial if you need immediate assistance while you travel.

Reaching out for that help is also easy. Your card will usually have phone numbers printed on the back in case you need to contact customer service. Most of them are 800 numbers. It doesn’t matter whether you are calling from the United States or from an international locale. However, there may not be a number printed on your card for international calls. In that case, contact the bank to find out the best way to reach someone.

What about if you lose the card? Make a call. Find out how long it might take to issue a replacement in the event your card is lost or stolen. Always be careful about where you store your card. Plus, it is also good to know how long you may be without it in case something happens.

Monitoring Your Purchases

Most foreign merchants and retailers are honest, hard-working business owners. They wouldn’t think of defrauding their patrons. However, you may come across a bad actor. This guy tries to take advantage of you. You are a seemingly naive and confused tourist who might appear to be an easy mark. Does not let that be you.

You use your card often as you tour through a foreign country. Thus, it is always a good idea to keep an eye on your transactions. This may sound paranoid. Yet, it is smart sense. That’s because you can dispute any unusual charges on the card made in the United States. However, the policies and consumer rights to dispute a strange charge made abroad are different.

You must protect yourself. Always keep your receipts from each purchase and transaction made while you are traveling. That way you have solid proof of that it. That can be a big help in disputing any weird charges made on the card. Remember, those charges may not immediately show up on your statement. Therefore, keep those receipts until you can account for every dollar spent overseas.

Be careful about getting charged twice for the same transaction. This is usually an honest mistake committed by a hotel or rental car company. That is because you often need a credit card to secure a reservation for each of those things.

Let’s say you check out or return the car. You may opt to pay in cash instead of adding those charges to the card they have on file. However, then your statement arrives and they ended up charging your card. If this happens to you, be sure you have a receipt for that cash transaction. It will prove that you indeed pay for the room or the rental. It shows that they charged the card erroneously. There is a way to avoid this from happening. That is because it may be easier to put the charge on the card you gave them previously. Then, you are securing your reservation with a card. Be sure to pick one that you know you can use to pay with later on.

Restaurants are another area you should monitor closely as well. It’s like paying cash for your travel reservations. Let us say you use your card to pay for a meal and leave a tip in cash. Be sure to denote as such when you sign the charge slip.

Don’t leave it blank. Doing so could lead to your server filling that space to get a little extra cash out of you, after you exit. Thus, hold on to your receipt. If the charge for that restaurant is higher than expected, you have proof to attempt a dispute.

Before You Go

You are making all kinds of plans and reservations. You are anticipating your departure on that dream vacation. However, make sure your trip goes smoothly. There are a few things you will want to do. These things will prepare you where your credit cards are concerned.

First and foremost, be sure your credit cards are valid. That means ensuring you will not be hitting the expiration date while you are away. Maybe your card is set to expire. The new card is going to arrive at your home or office address on file with your issuer. It’s not going to show up at your travel destination. If that happens, you are out of luck.

You should also check your current credit limit and be sure you have enough credit to spend for the entire trip. If need be, make a payment on the card to bring your balance down to zero, or as close as possible. That way you can be assured your card will not be declined when you need it the most.

Unfortunately, your card or cards may be lost or stolen. Thus, it is a good idea to have the account numbers stored someplace safe. It should be somewhere that you (and only you) can access.

Perhaps you decide to carry more than one card. In that case, you may want to put the majority of your purchases on just one. Then, keep the other one around as a backup. This way you can keep a better track of your expenses. Plus, therefore, you will not go over budget in your spending habits.

If something happens to the main card, you will not be left destitute on your vacation. You still have the other card to fall back on. Be sure NOT to keep them in the same place either. If your purse or wallet gets stolen, then it is all gone. Keeping the backup somewhere else will help protect it and you.

Our Final Thoughts

As with many things, it is best to be safe than be sorry. The precautions you can take can ensure your overseas travel is incident free when it comes to your credit cards. This will prove beneficial in the long run. That means avoiding additional, unnecessary costs where you can. Plus, you need to protect your cards from being overcharged. If that happens, reach out to your issuer. That way they do not shut down the card for fraudulent activity is also a smart step.

Foreign transaction fees can add up. Therefore, you may want to apply for a card that doesn’t have that fee attached to your purchases. Compare those cards to one another. You will see which ones offer the best APR’s and other perks. It is always better not to pay the foreign transaction fee. Yet, not if it means you will be paying more in interest. That is especially true if you plan to carry a balance. You could also search your options on airline miles credit cards. That way you’ll get rewarded for your purchases as you travel.

Finally, know when to use credit over debit. If you have both, paying with one instead of another can help protect your credit card purchases overseas. It can reduce your travel expenses. Debit cards are best for withdrawing cash from foreign ATM’s. Conversely, paying for goods and services with your credit card is the better bet.

This is particularly the case when you are booking reservations. Hotels will often place a hold on your money with a debit card. Additionally, it may not be available for a week or more while the hold is released. Some rental cars will not even take debit cards to secure or pay for a rental. In those instances, always use your credit card. Look for apps to save money on travel. That is because they can also help reduce your costs while you are on vacation.


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