Using a Credit Card Overseas
Credit cards give freedom and independence because you don't have to carry money on you. Because of this credit cards are especially convenient if you travel. For many Americans traveling without one's credit card is simply unthinkable of. Yes, it is true that having your credit card with you is very convenient but if you are not aware of all terms and conditions, which apply to your credit card use abroad, you might have unpleasant surprises, when you receive your monthly statement.
First, one of the major disappointments in using a credit card abroad is that your plastic friend is useless. Depending on the location of your travel, you might land in a country where your credit card is not accepted at all. This is quite possible even for global brands like Visa or MasterCard! With the smaller credit card systems, the situation can be even worse – your credit card might simply be invalid there. Because of this, it is always advisable that before you go overseas, check with your issuer if the country to which you are going to is on their list of territories in which they operate and if it isn't try to get another card, which is accepted in the place where you are going to.
Even if a particular credit card is accepted in a given country, this still does not mean that you will be able to use it. For instance, there are many cards that are popular in the USA and Canada only but are not so popular in Europe and vice versa. So, even if you have the legal right to use your credit card overseas, it might take ages till you find a merchant to accept it. Besides, if you can't use your credit card freely, this usually means that one of your alternatives is paying cash.
Generally, if your credit card is accepted in a particular country, this means that cash advances are possible, so you may decide that once you find a location where your credit card is usable, you will withdraw enough money to have cash till the end of your stay there. This is not the best idea because cash advances are charged at much higher rate than other purchases and there is always the risk that you will withdraw not the right amount. If you withdraw less than you need, you will have to search again for a location that accepts your credit card. You withdraw more than you will spend, when you return home you will have some useless foreign currency in your pocket.
Foreign exchange fees are another unpleasant issue. Usually credit card issuers charge quite a lot for providing the conversion service. The foreign exchange fee is only one aspect of the problem. The other aspect, which often can be even more unpleasant, is the exchange rate. Very often the exchange rate is quite unfavorable for you and as a result of this (and the fees) you can spend 25% or even more on the process of converting your money from one currency to another.
Well, it is not necessarily that bad. Very often going abroad is trouble free. You can use your credit card as if you were at home. But in order to enjoy your stay abroad, you need to do your homework – i.e. check in advance if your credit card will be usable. You can do this with the issuer, or if you know somebody who lives in this country, you can ask them for advice what to do. Sometimes, especially for long visits overseas, the best solution is to get a local credit card and leave yours at home.
If you can't get a local card because of different restrictions (for instance because you don't reside permanently there), think in advance about other solutions, like getting a truly international credit card. Sometimes even a check book is a great idea, especially is checks are accepted in the country to which you are going. So, as you see, traveling abroad is not only fun but if you don't pay attention to all those minor details, like money issues, your travel might turn into everything else but fun!