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Things to Know Before Using Your Credit Card This Spring Break

Things to Know Before Using Your Credit Card This Spring Break
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Monday, 26 February 2018 03:30 PM Current | Bio | Archive

Spring break season is here, and for millions of Americans that means it’s time to travel.

Total overseas travel jumped 35% from February to March in 2016, according to the data from the National Travel & Tourism Office.

When on vacation abroad, many will be faced with an important choice: Should you use cash or credit? Those who would rather put things on plastic should familiarize themselves with a few things before doing so.

Using a credit card on domestic travel is generally problem-free. As long as customers inform their credit card issuers that they will be traveling, it is unlikely transactions will be denied, and all the rules and regulations apply in the same way. International travel, however, comes with a few pitfalls and potential issues, but it can also be wonderfully rewarding.

When Finding a Card

The first step in using credit abroad is finding the right credit card. When making this decision, consumers should keep several things in mind: global acceptance, fees, and rewards programs for global purchases.

Cards using the Visa and Mastercard payment networks are accepted in most countries by a wide variety of merchants. Smaller networks, like American Express and Discover, may have lower acceptance rates, and if a card is not accepted, nothing else in this article matters. The issuer is less relevant: A Visa credit card issued by the local credit union is still part of the Visa network. Discover provides a map of countries to see where its cards are accepted.

Another important point to consider is foreign transaction fees and exchange rates. Domestically focused cards may include foreign transaction fees (typically around 3%), but there are travel credit cards that charge no foreign transaction fees. There are also potential fees on cash withdrawals for debit/ATM cards and cash advances. That 3% may seem small, but it can eat into rewards incentives like cash back.

The final point to consider when selecting a card is its rewards program. Rewards systems are often the deciding factor for travelers, so most cards that offer rewards will advertise these perks. For example, some cards may be extra rewarding when used to pay for tourist attractions, taxis or other travel-related purchases. If it is not advertised and not in the fine print, do not assume points will accumulate on foreign transactions like they do at home. When in doubt, check with the issuing bank.

Before Leaving Home

A telltale sign of fraud is transactions in foreign countries without prior notice to issuers. If you do not notify the issuer about impending travel, it is very likely a transaction in a foreign location will be blocked and flagged as fraudulent. This can be a nightmare when traveling without access to good telecommunications.

Checking credit limits and comparing them to your expected travel budget is also important. It is not only embarrassing to have a transaction declined, but it can have more substantial consequences when a traveler must pay for a service, cannot speak the language and has no means to pay for that service other than a declined credit card. It is advisable to carry at least a little cash, even if you won’t get the most favorable exchange rate when obtaining the cash.

It is also essential to check technological compatibility. The United States finally has EMV chips on most cards, but not all smart chips are the same. The U.S. uses the chip-and-signature variant, while many places around the world, especially in Europe, use chip-and-PIN technology. The technology is slightly different, and it may impact where and how you can use your cards. When another human is present, this is usually easily solved. However, for automated transactions, such as buying train tickets in a deserted station from a machine at 3 a.m., having no PIN may leave you stranded until an attendant arrives. Ask your bank whether your card supports chip and PIN. If it does, make sure you set a PIN before you leave for your vacation.

While Abroad

When abroad, be wary of common scams. These are the same as at home: card skimmers, unscrupulous merchants and excessive cashback offers. Follow the same precautionary measures you always would.

Many merchants will offer dynamic currency conversion (DCC) when they process a foreign credit card. This service lets the cardholder know the exact amount in his/her home currency, rather than guessing at exchange rates. However, its usefulness comes at a cost, and merchants or banks may tack on a significant exchange rate markup, effectively erasing good exchange rates and offers of no transaction fees from the card.

Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
 

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MaximeRieman
When on vacation abroad, many will be faced with an important choice: Should you use cash or credit? Those who would rather put things on plastic should familiarize themselves with a few things before doing so.
credit, card, spring, break
814
2018-30-26
Monday, 26 February 2018 03:30 PM
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