April 10, 2023 / Reading time: approx. 5 minutes
Hear the top 8 tips for using a credit card while traveling abroad
When preparing for a trip abroad, many people focus primarily on packing appropriate clothing and accessories. While this is important, it’s also beneficial to figure out which credit cards to bring and how to use them safely. Credit cards not only provide a safe and convenient payment option, they also provide valuable benefits that can enhance your travel experience and provide assistance in the event of the unexpected. By selecting the right credit cards, you may be able to forego travel insurance and be confident knowing you’re protected in the event of a trip interruption.
When packing for international travel, you should carry credit cards that are widely accepted and offer generous travel rewards, as well as the elimination of foreign transaction fees. While it’s possible to achieve this with a single card, it’s a good idea to have backup options handy. This article presents 8 tips for using credit cards while traveling abroad.
1. Carry widely accepted credit cards:
Visa and Mastercard are credit cards recognized worldwide. A company that accepts credit cards will likely accept your Visa/Mastercard. American Express and RuPay also have a global presence but are not yet as widely accepted. However, both credit card companies are trying to increase their overseas acceptance rates by working with different banks and payment networks. However, it is always a good idea to bring a backup Visa or Mastercard to avoid any inconvenience in a foreign country.
2. Inform your credit card issuer of your travel plans:
If your credit card account shows purchases thousands of miles away from your usual location, your card issuer may consider them fraudulent and decline them. To avoid any confusion or inconvenience, it is best to let your card issuer know your travel itinerary in advance. This can be done through the issuer’s website, mobile app, or by calling the phone number listed on the back of your card. By letting them know ahead of time, your card issuer will know that the transactions are legitimate and they won’t be declined.
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3. Check your card’s foreign transaction fees:
Most credit card issuers charge a foreign transaction fee for purchases made abroad from a foreign merchant. These fees typically range from 1% to 3% of the purchase price and can cause you to pay significantly more than the listed price for anything you buy overseas. This can get quite expensive throughout a trip. However, some credit card companies do not charge this fee at all.
Before travelling, it’s a good idea to check your credit card’s terms and conditions to determine if they impose fees on foreign transactions. If so, it makes sense to apply for a credit card that doesn’t charge foreign transaction fees. To ensure you have enough time for the application process, setting up your account and delivering your new card, you should apply well in advance of your trip.
4. Check travel insurance coverage:
One of the most important benefits of having a credit card while traveling abroad is travel protection. Many issues can arise while you’re out of the country, and travel insurance can help you recover non-refundable travel expenses and get help in an emergency. It is recommended that you bring a credit card that includes trip cancellation and interruption insurance, primary rental car coverage, and baggage insurance. Many credit cards offer this type of travel insurance, so it’s important to understand the benefits of your preferred card and have one that will provide coverage in the event of unforeseen circumstances. However, if your card does not offer travel insurance, it is advisable to purchase travel insurance separately.
5. Avoid using dynamic currency conversion:
Dynamic Currency Conversion is a credit card feature that allows you to make purchases in a foreign country using the currency of your home country. This conversion is done at the merchant, allowing you to see the exact cost of items in your local currency, regardless of your location. For example, if you are in Paris and buy French scarves and soaps in euros, you might be wondering how much they cost in Indian rupees. But with the dynamic currency conversion, you can know immediately what is the amount of euro in rupee.
Although it may seem attractive, unfortunately, the exchange rate for dynamic currency conversion usually works unfavorably for credit card users. If a foreign merchant offers you the choice to pay in your national currency or in the local currency, it is generally more economical to choose the local currency. If you want to avoid dynamic currency conversion transactions altogether, you can choose to use cash instead. Exchange rates offered by your local bank or currency converters are likely to be more favorable than those offered by DCC.
6. Take advantage of credit card rewards:
You should review the travel benefits of each of your credit cards to get the most out of them while traveling. This will help you choose the card that offers the most benefits for your trip, such as earning extra points for expenses like meals. Another way to earn maximum rewards is to book your flights and hotels through the credit card issuer’s rewards portal. It will allow you to use your loyalty points to pay for your trip. Additionally, having one or more premium travel credit cards also grants access to airport lounges through programs such as Priority Pass, which offers a range of complimentary amenities such as food, beverages and spa sessions. This makes it a great option for long international journeys.
7. Manage your international credit card spending limit:
Despite the steps taken to avoid overspending or misuse of your credit card, situations beyond your control may arise. To avoid such scenarios, it is advisable to manage the international spending limit of your credit card according to your needs. This can be done by activating, checking, increasing, decreasing or deactivating your international spending limit through various methods such as internet banking, mobile app, online credit card account or by contacting customer service. By doing so, you can ensure that you stay within your budget and avoid any potential misuse of the card.
8. Carry enough cash:
Although credit cards provide convenience and security while traveling, relying solely on them while vacationing abroad may not be the best approach. Cash can be useful in such situations and even help you save money, especially if you don’t have a credit card with no foreign transaction fees. Cash is widely accepted and can help you avoid some of the transaction fees associated with using credit cards. In addition, some places are still not equipped to accept electronic payments, which makes it essential to carry cash in reserve.
Remember these tips when traveling with a credit card to maximize your rewards and keep your transactions secure.
KETKI JADHAV has been a Content Writer at PersonalFN since August 2021. She holds an MBA (Finance) and has over seven years of retail banking experience. Ketki specializes in covering articles on banking, insurance, personal finance and mutual funds and has been doing so for over three years now.