If you’re living or planning to move abroad, you may be wondering what credit card is best to use in your new destination. Here’s our take on using credit cards as an expat and the best cards for travel available today.
What to consider when using a credit card abroad
When choosing the best credit card for your life as an expat consider the financial norms of your new country of residence.
If you’re coming from the United States, it’s easy to get used to the convenience of credit cards being accepted at most retailers. A U.S. Bank survey found that 47 percent of all U.S. consumers prefer to use digital payment methods or credit cards over cash. Though many European countries use credit cards at the same rate (or more) than the United States, many Asian and African nations still prefer cash and don’t widely accept cards at everyday restaurants and stores.
If you are moving to a country that is still largely cash-based, then you may have trouble benefiting from credit card rewards. However, if you’re moving to a country with robust credit card and wireless payment systems, then a credit card could benefit you much in the same way that it would in the United States.
Important credit card factors to consider as an expat:
1. Foreign Transaction Fees: Travelers and expats alike should consider credit cards with no foreign transaction fees. Potential rewards from credit card purchases could be negated by foreign transaction fees that typically cost three percent of the purchase value.
Though that 3 percent may not seem like it will break the bank, every little bit adds up and if you have, say, a $500 purchase you would pay an additional $15 just for the foreign transaction fee.
2. Reward Requirements: If you’re going to be living outside of the United States, it’s important to consider reward requirements before deciding to get a new credit card. If you’ll be living in a country where most transactions are handled with cash, then it may be difficult to meet reward requirements.
For example, if you had the Chase Sapphire Preferred® Card, it may be difficult to redeem the bonus offer of 60,000 points because you must spend $4,000 in the first three months of opening the account. Though this may be an easy requirement to meet in the United States, if you’re moving to a country like Germany where 80 percent of all transactions are handled with cash, it may be hard to spend enough on your credit card to make it worth it.
3. Annual Fee: As with all credit cards, a factor to consider is the annual fee. There is no right or wrong choice when it comes to picking a card with annual fee because the decision comes down to what rewards you want for the purchases you make daily. When choosing a credit card for your life as an expat, consider the annual fee of any credit card you choose and whether or not the rewards will offset the cost of the fee.
4. Travel Rewards: As many world travelers know, one major benefit of having a credit card abroad is getting points for flights and hotels. Being rewarded for purchases you already planned on making is beneficial and it can give you points for future trips around the globe. As an expat, it’s worth considering credit cards with great travel rewards.
Best credit cards for expats
The Chase Sapphire Reserve credit card may have a hefty annual fee at $550 a year, but it comes with a laundry list of rewards that makes this credit card more than worth it for any expat. This is truly one of the best credit cards for travelers on the market today with rewards like 3X points on dining and travel (immediately after earning your $300 travel credit) and 1X points on all other purchases. Additionally, card owners get a 50% boost in points when they redeem their travel with Chase Ultimate Rewards®.
Nearly on par with the Chase Sapphire Reserve (but without the high annual fee) is the Capital One Venture Rewards Credit Card. This card has earned its spot on the consideration list of any globe-trotter with competitive rewards like unlimited 2X miles per dollar on any purchase and a $95 annual fee. Better yet, you can earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first 3 months.
If you’re looking for a good credit card as an expat, but you don’t want the hassle of an annual fee, the Bank of America Travel Rewards credit card may be just the card for you. This card has no annual fee and an introductory 0 percent APR offer on purchases that lasts 12 billing cycles (16.49%-24.49% variable APR after). The Bank of America Travel Rewards Visa also offers 1.5 points on every dollar you spend and new cardmembers are eligible for 25,000 bonus points if they spend $1,000 in the first 90 days after opening an account.
Before you go
While credit cards function about the same around the world, there are some transactional differences that you should be aware of. In most popular travel destinations, using just your credit card chip will not be an issue. However, if you’re traveling to destinations that are off the beaten path for American tourists, then you may find using your credit card to be a struggle.
While it is customary in the United States to sign a receipt after purchase with a credit card, some merchants abroad may not understand when their transaction terminal asks for a signature. To avoid this possible confusion, it may be good practice for credit card owners to request a temporary PIN number for their credit card from the issuer.
Finally, always remember to tell your credit card issuer when you are traveling abroad to avoid having your card frozen because the issuer assumes your card has been stolen.