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Using credit cards outside of the country

On my first trip overseas, more a decade ago, I made a long list of things to do before I left home. First on that list, I called my credit card company to let them know I'd be traveling outside of Canada. If I didn't update them, I was worried I'd either get a call from them when I tried to make a purchase overseas, or worse, I might not be able to use my card at all.

To try to prevent fraud, credit card companies keep track of your usage patterns. So, if going to Europe isn't a regular occurrence for you, the company assumes someone else is using your card. "Credit cards are still the most effective way to buy foreign currency," says Jennifer Reed, vice-president of public affairs for MasterCard Canada, in Toronto.

Just keep in mind that you'll pay for those conveniences. To learn how to make the most of your credit card while out of the country, read on.

Before you go
There are hundreds of credit cards to choose from today. If you travel outside of Canada on a regular basis, consider applying for a card that offers shipping insurance. That way, if you send gifts home, shipping insurance will cover the cost of replacing the item if it's damaged when it arrives. The price of the insurance varies from card to card. To make sure your purchase qualifies, you must buy it using your credit card.

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Before heading out on your trip, it's a good idea to pay off the balance owing on your card. If you can't, then pay off as much as you can to ensure there's enough credit left for emergencies.
You should also make a copy of your credit card information in case it gets stolen. Leave one copy at home in a safe place and keep another with you while out of the country (keep it separate from the card itself, in case it gets stolen). You'll need the card number itself, as well as the toll-free help number for the area of the world where you're traveling. You should also ask your company if it accepts collect calls, which may be useful if you don't have access to a calling card or a hotel phone.

If you're traveling with a cell phone, leave that number with your financial institution so it can contact you about suspect activity on your card right away.

The price of convenience
Credit cards are handy outside of the country because they take care of the currency exchange rate for you. Keep in mind, however, that most credit cards charge a foreign exchange conversion fee or commission between one percent and two and a half percent. So, make sure you're getting the lowest fee on your card before you leave home.

Cash advances are another option, but you will pay for the convenience. Interest charges kick in from the moment of withdrawal, whereas normal purchases only start accruing interest after a month. For example, if you take a $200 cash advance from your credit card and you take two weeks to repay, you may have to pay as much as $36 in interest.

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-- Posted: March 30, 2007
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