Traveling? Know This About Your Credit Card

Traveling? Know This About Your Credit Card
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Our must know list of things about international traveling and credit cards.

• Money & Finances: Banking • Money & Finances: Credit Cards • Money & Finances: How-To • Money & Finances: Tips & Tricks

If you're getting ready for an international trip, you may be planning to put most of your expenses on a credit card. Using a credit card can be a useful way to avoid carrying around large amounts of cash or dealing with getting money changed. However, there's a few things you need to be aware of before you go to avoid finding yourself in a situation where you can't pay for anything.

Foreign Transaction Fees

Many credit card issuers charge a foreign transaction fee on purchases made in other countries. This fee is usually 1% to 3% and, unlike interest, cannot be avoided by paying your balance early. Even if you're at a merchant that caters to tourists and can make the charge in U.S. dollars, the fee will usually apply based on the merchant's physical location. In addition, for transactions where your credit card issuer does need to make a currency conversion, a less than favorable exchange rate will likely be used.

Before you go, review your credit card agreement for these fees. If they are charged, look into a travel rewards credit card. These cards frequently have no foreign transaction fees even if the fees are applied to other credit cards from the same issuer.

Will Your Credit Card Swipe?

U.S. travelers headed abroad for the first time may not realize that the magnetic strips used on U.S. credit cards were phased out in most other countries years ago. Major hotels and other businesses may be able to process transactions with a magnetic strip card, but other businesses are likely to only accept chip cards.

EMV Chip Credit Cards contain a chip that is read when it is inserted into a card reader. The technology makes cards more difficult to duplicate and protects merchants and banks from fraud. Chip cards come in two varieties. Chip and signature and chip and pin. Chip and signature cards function similarly to U.S. cards in that the purchaser must sign a receipt after the card is read. Chip and pin cards use a pin like a debit card.

Chip and pin cards are accepted in far more places abroad. For transactions at unattended locations such as gas pumps and train ticket vending machines, they may be the only type of card accepted. However, very few U.S. credit card issues offer these cards. Chip and signature cards are available from most major U.S. banks upon request and will be accepted in most foreign locations with an attendant present to process the transaction.

Bank Fraud Alerts

Many banks use risk management software that automatically locks a credit card if suspicious transactions are detected. International transactions are a major red flag for these programs. If you are going abroad, contact your credit card issuers ahead of time and ask them to place a note on your account.

Some issuers are more reliable than others about whether contacting them will actually keep your card from being frozen when you use it abroad. If your account is frozen, it may be difficult to contact your bank or to even be notified that your card is frozen if you're not using your usual cellphone. You may also be required to call in at very expensive international call rates. To minimize any inconvenience, try to carry a few credit cards from different issuers.

Fraudulent Transactions

Some foreign countries have much higher rates of credit card fraud than in the U.S. In addition to cards being duplicated, some merchants try to take advantage of international travelers by processing purchases for higher amounts than agreed or by processing them multiple times. Request and keep a receipt for all purchases. In addition, be aware of your issuer's transaction dispute process. Using a bank that allows you to file disputes easily and is known for deciding in favor of their customers may save you headaches when you return from your trip and receive your bill.