Key findings
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When traveling internationally, credit cards can offer great advantages over cash – including convenience, rewards and protection.
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Make sure you choose a credit card that is generally accepted abroad – and if in doubt, get a spare card.
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Fees may apply when using your credit card abroad. The most common fees include foreign transaction fees and merchant fees.
Credit cards are accepted in most parts of the world, which is great for those looking to maximize rewards on their international travels. Many cards not only offer generous rewards on travel spending, but also convenience and extra protection should your trip not go as planned.
In most cases, using a credit card is better than using cash. However, problems can still arise when using your credit card abroad. Fortunately, there are workarounds for some of the most common problems that can arise.
How to make sure your credit card works abroad
Several factors can cause your credit card to not work abroad. For most of them, there are simple solutions that just require a little advance planning.
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Visa and Mastercard are the most widely accepted credit card providers worldwide. Although American Express and Discover can be useful in many situations, you should carry a backup Visa or Mastercard card when traveling abroad, just in case.
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In many countries around the world, chip cards with a personal identification number (PIN) are the norm. These cards use a microchip and PIN to validate transactions instead of the cardholder’s signature. Instead of swiping the magnetic strip through the card reader, consumers insert the card into the machine and enter the PIN associated with the chip. If you have a card with a chip in your wallet, set a PIN so you don’t have any problems using it abroad.
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If you booked part of your trip with your credit card, it’s usually not necessary to tell your bank. However, if you didn’t use your credit card to book part of the trip, notifying them of your travel plans well in advance will reduce the likelihood of your bank declining your foreign transactions. If your bank knows you’ll be in Paris for a week, it’s less likely to decline all those patisserie purchases. It’ll then know your credit card hasn’t been compromised – you’re just a tourist eating as many chocolate croissants as you can get your hands on.
Is it worth using a credit card abroad?
Yes, using your credit card abroad offers security and convenience that cash doesn’t. You can earn rewards on every purchase that you can save and redeem for future travel experiences. The items you buy may also be covered by purchase protection, giving you extra peace of mind. And more importantly, you don’t have to carry around large amounts of cash and worry about the security risk that comes with it.
While you may want to carry some cash for those smaller, irresistible purchases, a credit card offers you better protection and other additional benefits.
How much does it cost to use a credit card abroad?
When you use a credit card abroad, you’ll incur two types of fees: foreign transaction fees and merchant fees. Foreign transaction fees are about 3 percent and can be avoided because many travel rewards cards waive them.
Merchant fees can include surcharges or processing fees for using your card. These fees help offset the merchant’s processing costs and can vary from 3 to 8 percent. These fees help offset the cost of the extra protection you get from a credit card.
If a merchant asks you if you want to pay in US dollars or the local currency, always choose the local currency. Your credit card issuer will likely give you a much better exchange rate than the local business owner.
Unfortunately, there isn’t much consumers can do about these fees. They can either pay the fee, pay cash, or shop elsewhere to avoid it. The last thing you want is to get into a dispute with a foreign small business owner who is just trying to make ends meet.
The conclusion
What you pack in your wallet is just as important as what you pack in your carry-on when traveling abroad. You should carry one or more of the most popular travel credit cards that are widely accepted and offer purchase and travel protection, generous rewards and travel perks. There may be some problems when paying for purchases with a credit card, but there are workarounds. If you follow security practices, you won’t have to carry large sums of cash and won’t have to worry about your transactions being declined.
