How to Use a Credit Card Wisely While Traveling Abroad
Having access to a good amount of cash is essential to the success of any trip, especially if you plan on traveling overseas for an extended period of time. However, carrying around large amounts of cash is seldom a good idea in any city. For this reason, in addition to favorable exchange rates and rewards programs, credit cards are a sensible alternative to cash while traveling abroad.
While credit cards offer convenience and will save you money in exchange rates, there are a few things you should know before you go on your trip to avoid being ripped off.
The first thing you may want to consider if you’re traveling for a long period of time is applying for a credit card with no foreign exchange fee. The foreign exchange fee on most credit cards is usually between 2-3 percent, which can add up to a lot over the course of your trip. Capital One is the issuer that offers the most credit cards with no foreign exchange fee.
After you have your no foreign exchange fee credit card, you want to make sure you use it wisely. Knowing what to look for will help you to avoid credit card scams while you’re traveling. One trick used by many merchants overseas is called Dynamic Currency Conversion. This is when the merchant offers to convert your transaction from the local currency into U.S. dollars. While it may sound tempting, you should refuse this offer.
Merchants will often charge exorbitant exchange rates, as high as seven percent, and pocket the difference. It is likely that this added charge will go unnoticed because, if you’re like me, you’re not doing the math on the spot to check that the exchange is accurate.
Now that you know how to avoid the tricks, you’ll also want to avoid unnecessary hassle. If you’re traveling in Western Europe in particular, you will notice that their credit cards are different from the ones used in the United States. They use a chip-and-pin technology that is more advanced and secure than the U.S. magnetic stripe cards.Continued on the next page