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Credit cards are widely accepted in most parts of the world, which is great for those who want to maximize rewards on their trips abroad. Not only do many cards offer generous rewards on travel spending, but they also provide convenience and an added layer of protection in case your trip doesn’t go as planned.
Using a credit card is better than using cash in most cases. However, you might still encounter issues when attempting to use your credit card abroad. Luckily, there are workarounds to some of the most common obstacles you’ll encounter.
See our Travel Toolkit for tips and insights to boost your savings and maximize your travel.
How to make sure your credit card works abroad
A handful of factors might prevent your credit card from functioning abroad. Most of them have simple solutions and require just a bit of advanced planning.
Use a widely accepted issuer
Visa and Mastercard are the most widely accepted credit card issuers worldwide. While American Express and Discover can come in handy, you’ll want to bring a backup Visa or Mastercard just in case.
Chip and PIN cards
In countries around the world, chip and PIN cards are the norm. These cards use a microchip and personal identification number — or PIN — to validate transactions, instead of a cardholder’s signature. Rather than swiping the magnetic stripe through the card reader, consumers insert the card into the machine and enter the PIN stored on the chip. If you have a card with a chip in your wallet, set a PIN so you don’t run into trouble using it abroad.
Notify your bank of your travel plans
Providing advance notice of your travel plans reduces the odds of your bank declining your transactions abroad. Knowing that you’ll be in Paris for a week, your bank is less likely to reject all those purchases at patisseries. They’ll know your credit card isn’t compromised — you’re just being a tourist, eating all the chocolate croissants you can muster.
Is it worthwhile to use a credit card abroad?
Yes — using your credit card abroad provides security and convenience that cash does not. You’ll earn points on every purchase, which you can save up and redeem toward future travel experiences. The items you buy may also be covered by purchase protection, giving you extra peace of mind. More importantly, you won’t have to carry large amounts of cash and worry about the security risk it poses.
While you should bring some cash for those smaller, irresistible purchases, a credit card provides stronger protection.
What’s the cost of using a credit card abroad?
You’ll encounter two types of fees when using a credit card abroad: foreign transaction fees and merchant fees. Foreign transaction fees are around 3 percent and can be avoided since many travel rewards cards waive them.
Another fee you can avoid is a so-called dynamic currency conversion fee. It’s a sneaky fee for travelers who agree for a transaction to be converted to U.S. dollars when you make a purchase in foreign currency. If you’re asked whether you’d like to pay in U.S. dollars with your card, say no. Instead, look up exchange rates and do the conversion on your own. Or check your card’s e-statement or app after the sale to see the conversion fee.
Merchant fees can include surcharges or convenience fees for using your card. These fees help to offset the merchant’s processing costs and can vary from 3 percent to 8 percent. These fees help offset the costs of the added protection you receive from a credit card.
Unfortunately, there isn’t much consumers can do about it. You can either pay the fee, use cash or shop somewhere else to get around it. The last thing you want is to get into a skirmish with a small-business owner just trying to get by.
The bottom line
What you pack in your wallet matters as much as what you put in your carry-on when you travel abroad. You’ll want to bring one or more of the top travel credit cards that are widely accepted and offer purchase and travel protection, generous rewards and travel perks. You might encounter a few issues when using a credit card to pay for purchases, but there are workarounds. By following safe use practices, you won’t have to carry large sums of cash or worry about your transactions getting declined.