The following is a guest post by Kevin Fleming. Kevin runs CreditShout, a personal finance blog dedicated to educating people on how to manage their finances and reviewing the best credit cards.
College students who travel abroad often bring credit cards along with them in order to easily facilitate their overseas transactions. If you fit into this category, there are a few things you should consider when traveling internationally with a credit card.
Not only does the type of card you choose to use matter immensely, so does your record-keeping and your pre-planning.
Here’s a quick guide on going abroad with credit.
Some people think that traveling with a credit card is dangerous, and they opt instead to take cash or an ATM/debit card. In reality, a credit card is one of the safest ways to spend money as you pass your time abroad.
Credit cards have superior protection against theft and monetary losses when compared with other options. As long as you let your card issuer know that you will be spending time abroad (and get their international access number in case of an emergency), you will be able to rest easy using your credit card for any purchases you make.
Stateside, you probably use the card with which you are most comfortable. However, if that card is not an internationally recognized brand, you might have trouble using it in certain countries and cities.
Stick with a card that you know will be accepted wherever you travel. Check ahead of time because it’s impossible to know whether they’ll accept your card at every establishment you visit; stick with the big guns—Visa is among the best for international travel.
When you decide which card you will carry with you, call ahead and get a complete list of the additional fees you’ll have to pay on overseas purchases. Most credit card companies have a “currency conversion charge,” but many are also adding additional charges, such as transaction fees. The issuing bank will also have a fee, and the combination of these fees may end up adding to over 5 percent per purchase. This is another situation that will require you to do a bit of research and get as much information as possible before you get onto that plane to see the world.
Certain cards may be better for international travel since they don’t charge these fees. For example, Capital One promises a 0 percent transaction fee on some cards meant to use abroad. For American Express Cards, the fee is usually around 2.7 percent, which is just under the 3 percent fee usually charged by Bank of America, Chase, HSBC, Wells Fargo and Citibank.
Your credit card has a limit, and spending over that limit will result in you paying exorbitant fees. By the time you realize how much you’ve spent, it will likely be too late. Save all of your receipts as you travel to protect yourself against charges you didn’t make, and keep track of all of your credit spending in a ledger. Sign up for online billpay and statements—that way, every time you access a computer you will be able to compare what the card company says with what’s written in your ledger.
Do you want to take a card that will allow you rewards for your purchases? How much are you willing to spend while you’re overseas? Have you developed a contingency plan in case your card is lost or stolen, or in case of an emergency that costs you a lot of money?
Consider all of the odds, from beginning to end. Talk to others who travel frequently to other countries and ask them about how they planned to spend money during their trip. Create a budget before you go—daily, weekly, monthly, and incidental—and stick to it completely. Allow yourself enough leeway to splurge from time to time if you must, but don’t overdo it.
Planning ahead is the one single thing you can’t afford not to do.
Note from Austin: Do you have any experiences and suggestions for using certain credit cards when you traveled internationally? If so, please share your findings in the comments below to help out other readers/travelers!
Photo: LindyIreland
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I am no expert. I only traveled overseas a couple of times and both to Japan. Great country by the way! My only other advice is making sure you understand the exchange rates well. It is easy to get carried away!
.-= LeanLifeCoach´s last blog ..Aldi – My New Favorite Store =-.
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Austin Reply:
March 1st, 2010 at 1:02 pm
It’s especially important to avoid exchanging money at the airport as they’ll rip you off before your trip has even officially started. If you can wait until you find a bank or hotel you’ll be in much better shape.
Where did you visit in Japan?
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I have only been out of the country a few times (China, Korea, Mexico, and St Lucia) but I would second the tip to avoid exchanging money in the airport.
.-= Credit Card Chaser´s last blog ..Will the CARD Act Turn Credit Card Users into Payday Loan Users? =-.
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Austin Reply:
March 3rd, 2010 at 9:58 am
How did you prepare your money for visiting those places? Exchange some before at home, or wait until you got to the country?
Did you like China? I was in Beijing and it rocked my world. It was unlike anything I’ve ever experienced.
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BEFORE you leave, I would also call the credit card company you intend to use on your trip and let them know to expect international charges on your account. We had to make a very expensive international phone call because they Card company saw “suspicious charges”, thought our card was stolen and had cut it off.
.-= Stay at Home Mom CFO´s last blog ..“Making Work Pay Credit” and the SAHM =-.
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Austin Reply:
March 4th, 2010 at 8:30 am
I can’t believe I forgot to talk about that!
Your cards will shut you down every time if they aren’t aware you’re leaving the country. There’s too much suspicious activity out there for them to assume you went on a vacation.
Great point, SAHMC (can I call you that? lol)
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