7 Tips for Using a Credit Card Outside of the US

The following is a guest post by Craig Ford who shares money saving vacation tips at Help Me Travel Cheap.

Lots of Americans get into the habit of buying everything with credit cards, so when it comes time for vacation, it is only natural that they are going to take their credit cards with them. 

However, before taking your plastic on your vacation outside of the US, here are a few facts you should know.

1.  Your credit card may charge an extra foreign currency exchange fee. 

How much?  Well, that depends on the credit card.  There are some that don’t charge anything (i.e. Capital One and several Chase cards).  Otherwise, a common fee is 3% for Visa and MasterCard.  American Express typically charges 2.7%, though they do have a few cards that don’t charge anything.

Just be sure you check the credit cards in your wallet and use the card that doesn’t have a fee. 

2.  Tell the credit card company about your vacation.

No, don’t tell them all the sights you plan to see and how excited you are.  Tell them the dates you’ll be gone and your destinations for those dates.  Some credit card companies will freeze your account immediately if there is a charge overseas.  This is especially true if you never travel outside of the US.  However, after you pre-notify them, they are less likely to put a hold on your account.

3.  Get your credit card PIN number.

In the US when you use a credit card, you are almost always given the option of using the card as a signature based transaction.  That means you sign for your purchase.  However, in some countries overseas, you’ll be at a location that requires a PIN based transaction.  Save yourself the hassle and the awkwardness by learning your PIN before you go.  Simply contact the credit card issuer, and they’ll give you the number or help you set one up.

4.  Not everyone accepts credit.

Your credit card should never be your sole source of funds on vacation.  There are many rural vacation destinations where your credit card won’t be useful for anything other than scraping the grime off your hotel window. 

5.  Different credit card brands have different levels of acceptance world wide.

In my experience, Visa and MasterCard have the best acceptance rate world wide.  If you use a different credit card brand, you’ll want to be prepared with a backup card or cash to cover situations where credit is not accepted.

6.  Keep credit card details in a separate place.

You’ll notice that your credit card has two phone numbers on the back.  The first is a toll free number to call in the US.  The second is a number for calling overseas.  Personally, I don’t like to carry written records, so I use a secure file on my computer (RoboForm notes) to keep a backup of my card information with the overseas contact number.  This way, if a card is ever lost or stolen, you’ll easily be able to contact the card issuer. 

If you have Skype, you can call a US based 1-800 number; otherwise you’ll have a difficult time reaching the toll free number.

7.  Avoid paying in US dollars.

Certain hotels and other popular tourist destinations may publish a price in the local currency and one in the US dollar rate.  The problem is that that US dollar rate is typically offered at a higher exchange rate then you’ll get with your credit cards.  To make matters worse, sometimes you can still pay a foreign currency exchange fee if you use the card overseas – even if you charge in US dollars. 

Credit cards are a safe and secure way to spend money on a vacation overseas.  Now you can be sure you’re properly informed before getting on the plane. 

Are there any other tips you think need mentioning?

Comments

[jbhk]

3. Get your credit card PIN number.
I don't know about this, because using a PIN means you are not using the credit, i.e. debit. Then, it will treat the transaction like a money withdrawal like you get money using an ATM, huge interest. No No!!

One tip I will add is practicing your signature. Usually no shop in US will verify your signature, you could really sign whatever you like. In other countries, they really check your signature. Last time when we were in Hong Kong, my husband couldn't sign a good signature, finally he tried five times to get one to be accepted.

Another one is don't expect you can use credit card when you buy small amount. Many shops have a minimum amount to use credit card. Some shops even would add the financial charge that the bank charge them on your bill, make sure to ask first!

[Jon]

I was fortunate while traveling in Europe last year that my (small local) bank did not charge any foreign transaction fees or play games with exchange rates when I used my Visa debit card to get cash from the ATMs, so I used it solely to do that, paying for the "big" travel expenses on my Chase Visa in as few transactions as possible, so as to minimize fees and exhange rate surcharges. Check your small bank's policy on foreign transactions.

[mdb]

I would add, place a sticker or tape over the security code.

[everyday tips]

I live about 20 minutes from Canada, and I have always just used my credit card for all transactions I could. I hate dealing with exchange rates and such.

[Indigo]

After having traveled to Canada, England, Turkey, and a few other countries in Europe and Asia, I can re-soundly say that using credit card out side of the country is a bad idea. The fees charged by the merchant, bank, exchange-rate is horrible. It's best to use your credit card as last resort, for emergencies.

Another tip is you WILL lose your credit/debit card and your wallet. Make sure you email all of your bank contact numbers to yourself so you can have access to them from anywhere. You won't need the physical card. (Actually make sure you scan your passport, birth certificate, etc and email them to yourself. In case you lose them, at least you can get to the copies.) Should you lose your cards, make sure to put a halt on you vacation and call up all the banks to have the cards suspended.

If you must use the card, make sure to use your credit card as credit card. Using it as a debit card will ensure you (in most banks) a fee for using credit as cash. Speaking from experience here. BOA charged me extra fee for using credit card to make Money Gram transfer. They considered it cash withdrawal. Beside this fee, you will also incur a different and higher interest rate.

It's not worth it to use credit card internationally. Just use cash.

[Salvatore S.]

Two comments - 1) always call your credit card company before international travel. The worst is for the card to get shut off due to suspected fraudulent charges right when you are traveling and need that swipe!

Also, I recently found something that is extremely interesting. All (that's right - ALL) Capital One credit cards do not charge any foreign exchange fee! We all have hated seeing those fees on our credit card bills after travel, but Capital One is the solution. To anyone that does not have a capital one credit card, I would point you there. Two cards that are (in my opinion) the best for cash back are:

1) The Capital One Cash Rewards Card - no annual fee and you get 1% cash back on all purchases and 2% cash back at gas stations and grocery stores.

2) Capital One Cash Rewards Card for Newcomers. This card has no annual fee and pays 1% cash back on all purchases and 2% cash back on all "merchants that classify themselves as travel-related service providers (for example: airlines, hotels, trains, car rentals, cruise lines, cabs/limos, buses, travel agents, timeshares)."
I personally chose to get this card as I would likely be spending on travel-related purchases when abroad so I might as well get 2% cash back while not paying a foreign exchange fee.

Also, I like that the card is a mastercard, as Visa and Mastercard are more readily accepted abroad than Amex or Discover.

Here is the comment directly from Capital One's FAQ site regarding the foreign exchange fee:

60. Will Capital One charge me a fee if I use my credit card overseas? Capital One does not charge a fee for using your credit card for foreign currency transactions. Foreign purchases will be converted at the foreign exchange rate in effect at the time of posting the charge.

Good Luck!

[Mike B.]

One thing I would add is that in order to get cash, the best way is usually straight through a normal ATM card (you might have to make sure it handles your network, usually Cirrus). I don't know if it is universal, but my CU does not charge any foreign exchange fees this way and the exchange rate is usually very favorable. Better rates than going to a money-exchange place with US dollars.

Also the formerly Chuck Schwab Card (now FIA) also has no foreign transactions fees.

[Claire]

I'd second that the ATM card is the best way to get cash (provided you know you are going to a town/city with a bank) - even if there is a transaction fee, the exchange rate is usually so much better that it's not worth the hassle of carrying and converting your native cash or traveler's cheques. I always withdraw the full amount allowed by my bank, and then split carrying the cash with whoever I'm traveling with.

I try to only use my credit card for large purchases abroad. Charging a few dollars at a time just isn't worth it.

[KT]

Try to find an ATM card that will not charge fees overseas either. I went on a trip and used a Citi atm card, and I was charged a fee by the atm, citi, and the foreign transaction fee. I recently switched to Ally and they won't charge a fee for an out of network atm (even overseas) and they will reimburse any fees that the atm charges (not the foreign transaction fee) if you mail them the receipt. They were much better for my recent trip to europe!

[JG]

KT, State Farm Bank refunds ALL ATM fees overseas (as long as you have a direct deposit into that account).