Credit Cards Are Convenient, but Can Cause Unexpected Headaches When Traveling Internationally

Foreign transaction fees, cash advance fees, and currency conversion can put a damper on your trip

Planning a Trip Of the Country? Here's What You Need to Know about Using Your Credit Cards
Image: NCCC
April 11, 2019

If you're planning to take a trip outside the country, your credit cards may not be that much of a priority. But if you're not careful, you can rack up a lot of unexpected fees and charges, which can tarnish the memories of your trip. Never assume that your credit cards will work the same way abroad as they will at home. So before you use your credit cards outside the country, keep these things in mind.

  1. Foreign Transaction Fees
  2. Foreign transaction fees can really add up on an international trip, or even a charge you make at home but for a company based in another country. This fee is a surcharge on your bill for any transaction that passes through a foreign bank or that is in another currency. Part of the fee is charged by the credit card networks, such as VISA or MasterCard, and the rest is charged by the issuing bank. The most common fee is 3% of the transaction, but some credit cards assess a flat fee or no fee at all. If you are planning to travel internationally and know you will use your card frequently, check with your card issuers to find the lowest fee. It may be beneficial, depending upon your expected purchase amounts, to apply for a new card that has no foreign transaction fees, such as the Amazon Prime Signature Rewards Visa, Chase Sapphire Preferred, and Capital One Venture Rewards.

  3. Cash Advance Fees
  4. If you need cash but have no way to get it other than through your credit card, get ready for a cash advance fee. These fees are charged for making a cash advance and often run between 4% and 5% of the amount of the withdrawal or a flat fee, which ever is greater. Additionally, you'll be hit with fees charged by the particular bank you are using should you choose to get a cash advance through an ATM. And as you pay down your balance after your trip, the money goes first to pay off balances with lower interest rates, leaving you with an untouched balance for the cash advance at upwards of nearly 30%. To help keep your cash advance fees low, try to do only one cash advance of a larger amount as opposed to several smaller advances that can add up more quickly.

  5. Dynamic Currency Conversion
  6. Prices are listed in the local currency in each country, which can make it hard on travelers to figure out the price in their own currency. So foreign merchants perform a service called dynamic currency conversion, which means that they charge your card in your currency (U.S. dollars) rather than in the local currency. This can look like a convenience, but the exchange rate is very different from the market rate. So you will often end up paying much more for the transaction than you would have if you stuck to the local currency.

    Foreign merchants have to give you the ability to decline this service and charge you as they normally would. However, some will break this law and charge you for the conversion anyway. To make sure this didn't happen, check your next statement as soon as you get it and file a dispute right away if you see any problems.

  7. Is Your Card Accepted?
  8. Make sure before you leave that the card you're planning to use is accepted where you're going. It's a good idea to have at least two cards, one from each network (e.g. one American Express card and one Visa card), in case a merchant doesn't accept a certain card. If you only plan on taking one card, Visa is your best bet. Every retailer in the U.S. accepts Visa cards, and most foreign retailers will take it too. Your next best bet is MasterCard, then American Express, then Discover.

  9. Fraud Protection
  10. Chances are that your credit card comes with fraud protection protocols that enable the issuer to monitor where your card is being used. If they see that it is charging transactions in a foreign country where it has never been used before, your account may be frozen as a precaution, leaving you without access.

    Before you travel, contact the issuer's customer service department and let them know where you will be using your card. Make sure to give them information about every location , including airports where you will only be spending a brief amount of time on a layover.

  11. Know Your Perks
  12. Most credit cards come with perks like purchase protection, travel insurance, and lost luggage protection. Some may also include services such as roadside assistance and car rental insurance. But you can't use perks that you don't know you have. Before you head out, make sure you know about all the perks and benefits that are included on your card. These could save you time and money.

  13. Other Tips
    • Make sure your credit cards are still valid and will continue to be valid throughout the duration of your trip. If it's expired or set to expire while you're away, the new card will be sent to the address on file with the issuer, not to your destination.
    • Check your current credit limit. Make sure you've got enough credit to cover your whole trip. If there's already a balance on the card, pay off as much as you can before you go. This will help make sure the card will not be declined when you really need it.
    • Store the card account numbers somewhere safe. This will be helpful in the event that your card is lost or stolen.
    • Carrying more than one card is a good idea. It will ensure that you still have access to your money if something happens to one of your cards. But don't keep the cards in the same place. If you keep both in your purse or wallet and it gets stolen or lost, both cards will be gone. Protect yourself by keeping them separate.