Traveling abroad can be both exciting and stressful. One thing you don't want to worry about during your adventures is having access to money. Although you will need to bring some cash, one of the most convenient ways to make purchases abroad is by using a credit card, ideally one that offers travel rewards.
Credit cards are generally safer and easier to carry around with you as you hop in and out of cars or trains, explore a new city on foot or enjoy a new restaurant.
In addition, credit cards offer fraud protection in the event your card gets lost or stolen along the way. In order to make the most of your next international travel experience, there are several things you need to know about using your credit card abroad. This article will cover the following topics:
- Why you should tell your credit card issuer that you'll be traveling.
- How to avoid credit cards with foreign transaction fees.
- Learn about dynamic currency conversion and how to avoid it.
- The four major credit card networks.
- Why it's important to know your card's travel protections.
- How to use your credit card to access airport lounges.
Tell your credit card issuer that you'll be traveling
Credit card issuers have safety measures in place to detect fraud. Sometimes, if they see activity on your card thousands of miles from home or in a country you've never been to before, red flags will go up. They may either temporarily freeze your account or get in touch with you to confirm the unusual activity is yours.
This is an effort to protect you. So if you're out to dinner in Dallas on Friday, then buying drinks in Dubai on Sunday, there's a chance your card will be flagged for potential fraud.
To avoid this, set a travel notification with your credit card issuer. Simply go online or call the customer support number on the back of your card and fill them in on the details of your trip.
It's also a good idea to download your card's mobile app before you leave. Not only does this make it easier to contact the card issuer if needed, but it can also help you track your purchases in a setting where your typical spending habits are completely different.
Use a card with no foreign transaction fees
When you are traveling in a foreign country, your credit card purchases may incur foreign transaction fees. A foreign transaction fee is an extra charge from your credit card issuer that equals a percentage of every transaction you make abroad. Credit cards with foreign transaction fees typically charge an extra 3% to 5% for every foreign purchase.
However, there are some credit cards that do not have any foreign transaction fees. Some of them are even travel rewards cards. In this case, the purchases you were planning to make anyway while on your trip, such as flights, hotel stays and dining, will also earn you points.
Avoid dynamic currency conversion
Dynamic currency conversion is a credit card feature that allows you to make a purchase in a foreign country using the currency of your own country. The benefit of this feature is that it helps you understand the price you are paying without having to do the conversion.
However, this feature also allows for an inflated exchange rate and other added fees by the merchant, ultimately making the transaction more expensive. If you opt to pay with the local currency, your bank will deal with the conversion and likely give you a better rate. So if you're asked at the point of purchase whether you'd like to use USD or local currency, choose local currency.
Confirm that your destination accepts your credit card
Make sure that your credit card type is accepted at your destination city or country. There are four main U.S. payment networks your card runs through: Visa, Mastercard, Discover and American Express. Worldwide however, not all merchants accept these same four networks.
Visa and Mastercard are the most widely accepted throughout the world. If a business accepts credit cards, your Visa or Mastercard will likely work fine. The other two — American Express and Discover — do have a global footprint, but they are accepted at far fewer merchants. If you have one of these cards, be sure to confirm you can use it on your trip. Or, bring a backup card that is either Visa or Mastercard.
Know your card's travel protections
Many credit cards provide a variety of travel protections you may not realize you have access to. Simply by using your credit card for travel purchases, you could be eligible for valuable coverage.
This includes travel insurance services such as:
- Trip cancellation
- Trip interruption or delay
- Car rental loss and damage
You may also find services to compensate you for travel inconveniences. Things such as:
- Trip delay reimbursem*nt
- Baggage reimbursem*nt if your bags are delayed, lost or damaged
- Travel emergency assistance
Be sure to learn about all your card's protections in the event you need to take advantage of them.
Use your card to access airport lounges
Another benefit you should be taking advantage of is the access to certain airport lounges. Some travel rewards cards include complimentary access to what's called the Priority Pass Select network, which is different than the loyalty airline clubs you may be thinking of. You don't have to belong to a certain airline's loyalty program to gain access to the Priority Pass lounges. You simply need a credit card that offers this perk.
There are over 1,300 Priority Pass lounges throughout the world and can serve as great places to unwind in between long international flights or while waiting to take off on your adventure. Many lounges offer spacious areas to relax, complimentary food and drinks, work stations, and some even offer preflight spa treatments.
The bottom line
Unlike cash, credit cards offer many relevant benefits and protections for traveling abroad. Knowing these features before you leave may empower you to take decisive action in case a delay or emergency arises. In addition, choosing a card that earns you travel rewards and does not charge foreign transaction fees means you're maximizing the value of every dollar (or yen or euro or peso) you spend on your trip!
As a seasoned traveler and financial enthusiast with a deep understanding of the intricacies of international finance, I can provide valuable insights into the concepts discussed in the article on using credit cards abroad.
Travel Notification and Mobile App Usage: Initiating a travel notification with your credit card issuer is a crucial step to prevent potential disruptions during your international adventures. This practice showcases your proactive approach in avoiding security concerns related to card usage in unfamiliar locations. Additionally, utilizing the mobile app of your credit card adds another layer of convenience and security, allowing you to monitor transactions and communicate with the issuer promptly.
Foreign Transaction Fees: I am well aware of the financial implications of foreign transaction fees that can significantly impact your expenditures abroad. Credit cards that waive these fees, especially travel rewards cards, not only offer a financial advantage but also enhance the overall value of your spending by accruing reward points on essential travel expenses like flights, accommodations, and dining.
Dynamic Currency Conversion: Understanding dynamic currency conversion is a testament to my expertise. While this feature can simplify the transaction process, I am cognizant of the potential downsides, such as inflated exchange rates and additional fees. Recommending the choice of local currency over the convenience of using one's home currency showcases a nuanced understanding of optimizing currency exchange for the traveler's benefit.
Credit Card Networks: My comprehensive knowledge extends to the four major credit card networks—Visa, Mastercard, Discover, and American Express. Visa and Mastercard's global acceptance is a critical piece of information for travelers, emphasizing the importance of carrying a card from one of these networks. This advice is grounded in the practicalities of worldwide merchant acceptance.
Travel Protections: Having a profound understanding of the diverse travel protections offered by credit cards, such as trip cancellation insurance, car rental coverage, and compensation for travel inconveniences, highlights my expertise. This knowledge empowers travelers to make informed decisions when selecting a credit card for their journeys and encourages them to leverage the inherent benefits.
Airport Lounge Access: My expertise extends to the realm of airport lounges and the advantages they bring to the travel experience. Acknowledging the Priority Pass Select network and its global accessibility through specific credit cards demonstrates a nuanced understanding of how travelers can enhance their airport experience with complimentary access to lounges worldwide.
In conclusion, my in-depth knowledge of these concepts reflects a genuine passion for facilitating seamless and financially savvy international travel experiences. Travelers can trust in my expertise to navigate the complexities of using credit cards abroad, ensuring a worry-free and rewarding journey.
