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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 (and should watch out for card fraud, to boot). Luckily, there are workarounds to some of the most common obstacles you’ll encounter.
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 (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 is likely not compromised. You’re just being a tourist and eating all the chocolate croissants you can muster.
Is it worthwhile using a credit card abroad?
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 more travel experiences in the future. Your purchases 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 that might post.
While you should bring some cash with you in case your credit card isn’t accepted, a credit card provides more protection.
What’s the cost of using a credit card abroad?
There are two types of fees you’ll encounter 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. That’s a fee that will be added in case you make a purchase in foreign currency and want to know what the cost in U.S. dollars is. You can find out at the point of sale for an additional fee, but you don’t have to use this service. Instead, you can look up exchange rates and do the conversion on your own.
Merchant fees vary widely, ranging from 3 percent to 8 percent. These fees help offset the costs of the added protection you receive from a credit card. However, there are cases of merchants imposing credit card transaction fees that are violating issuer agreements.
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.
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 travel credit cards that are widely accepted and that offer purchase and travel protection, generous rewards and travel perks.
The bottom line
Using credit cards abroad can be rewarding, and it’s more secure than utilizing cash. While you might encounter a few issues when using a credit card to pay for purchases, 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.