What You Need to Know When Using Credit Cards Abroad

“What are some tips for using my credit card overseas?”

 Before you travel overseas, take a closer look at the cards in your wallet.  One credit card may come with perks and benefits to make your trip a breeze while others could stick you with a bunch of unnecessary fees. See what to look for when choosing a credit card for traveling outside the United States and how you can avoid common credit card problems abroad.

Check foreign transaction fees

Credit cards can offer better exchange rates, fraud protection and the convenience of not having to carry around large amounts of cash during your trip. However, many credit cards charge a foreign transaction fee up to 3% on purchases made over overseas. If you will be using your card to pay for your hotel stay, meals and other expenses these fees can add up.  Check to see which of your credit cards is the most widely accepted abroad and which one carries the lowest foreign transaction fees. If you are planning an extended stay abroad, it may be worthwhile to apply for a card that has no foreign transaction fee at least 30 days before your trip. 

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Notify your issuer

Before you go, call your issuer and inform them of your travel plans. Let them know exactly when and where you will be traveling. Failure to do so can result in your account being temporarily suspended due to suspected fraud. It’s also a good opportunity to see if your card comes with any extra benefits like travel insurance and to ask for a toll-free number that will work outside the U.S. in case your wallet is lost or stolen.

Overseas acceptance

Don’t be surprised if your card gets occasionally rejected overseas. Most U.S. credit cards rely on a magnetic strip to transfer data. However, chip and pin cards are increasingly common in Europe and Asia.  These chip and pin cards, also known as EMV cards (for Europay, Mastercard and Visa), use technology embedded in a microchip that require a personal identification number to validate a transaction or a signature. If your card doesn’t contain a chip, in most cases an attendant can process your transaction. However, you may run into difficulty at automated ticket kiosks like those commonly found at train stations, gas pumps and parking garages simply because many don’t accept cards without a chip and PIN.

Check with your issuer regarding your card’s international acceptance. Some credit cards like Discover provide a map of their international coverage and the logos you can look for abroad to know if your card will be accepted. 

Dynamic currency conversion

Be wary of dynamic currency conversion when using your card to shop overseas. Many merchants will offer the ability to charge your purchase in dollars rather than the local currency. It sounds appealing, but doing so can result in hefty conversion fees, in some instances up to 6 percent. Some consumers may think that dynamic currency conversion will help them avoid a foreign transaction fee, but that’s simply not the case. Credit card companies will generally charge the foreign transaction fee in addition to the charge made from dynamic currency conversion.

Cash advances abroad

While a cash advance can be a convenient way to get cash abroad, especially in places where your debit card isn’t widely accepted, you should proceed with caution. The interest rates on cash advances can be over 20% which starts accruing right away on top of a transaction fee of around 3-5%.

Whether you will be taking an existing card or applying for a new one before to your trip, take some time to read the fine print to understand what fees will apply while you’re abroad. Doing so will help you avoid post-trip surprises on your credit card bill. Taking the time to plan how you will use your credit card overseas will ensure you receive all the benefits your card has to offer.

Discover card believes that consumers should be armed with the information they need to help them make informed credit decisions.

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

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