There are a few things you should consider when deciding on the best credit card to take on a trip to Asia. First, will the card be accepted? Next, will you get crushed with foreign transaction fees? And finally, does the credit card offer good rewards and other perks? With that in mind, here's a rundown on how to choose the best travel credit card for your next trip to Asia.
What makes a credit card good for traveling internationally?
There are many traveler-specific perks that might appeal to you, such as baggage insurance and trip cancellation protection. However, the top consideration if you're planning to do a lot of international travel is the card's foreign transaction fee, or preferably, the lack thereof.
Foreign transaction fees are a surcharge that gets added to a purchase when it originates from a non-U.S. source. These fees vary, but the industry standard is a 3% foreign transaction fee, or $3 per $100 in foreign purchases. Most credit card issuers have at least one credit card product that doesn't charge foreign transaction fees, and these are the ones you should narrow your search to.
As far as credit card brands go, Visa and MasterCard are the most widely accepted worldwide. American Express is accepted at many international businesses, but not at nearly the rate it is in the U.S. And while Discover cards have little or no foreign transaction fees, they are simply not accepted much outside of the U.S., which limits the usefulness of this benefit.
Finally, it can also be a good idea to choose a credit card with an appealing rewards program and other perks, in addition to not charging foreign transaction fees and being a Visa or MasterCard product. Fortunately, competition among credit card issuers is at an all-time high, and this has resulted in some of the best sign-up bonuses and 0% intro APR offers we've ever seen, in addition to excellent reward programs.
Credit card acceptance in Asia
According to travel website tripsavvy, you shouldn't plan to use a credit card as your main source of spending money for expenses like eating and shopping. "A majority of small shops, bars, and restaurants in Southeast Asia don't accept credit cards, and the ones that do will often tack on a surcharge or commission of 10% or higher," tripsavvy writer Greg Rodgers wrote in August 2017.
Credit card acceptance can vary significantly based on where you are. For example, according to Demystify Asia, an Asian business advisory website, China's credit card transaction rate is less than 14%, and in India, the rate is even lower at just 3.4%. However, in Hong Kong and Japan, the credit card transaction rates are 59.3% and 52%, respectively, so it's fair to say that credit cards are widely accepted in these countries.
Even in those countries with relatively little credit card usage, there are numerous places in Asia where you can readily use credit cards. For example, your hotel may accept card payments, and higher-end restaurants often accept cards.
Some of the best credit cards for Asian travel
I mentioned earlier that credit card offers are more generous than ever. They are also constantly evolving, so by the time you read this, the best credit card for your next trip to Asia could change, so be sure to check out our updated list of our favorite travel credit cards.
One good example is the Capital One® Venture® Rewards Credit Card which has no foreign transaction fees (by the way, no Capital One credit card products do), as well as an excellent rewards rate of two miles per dollar. The downside is that the card has a $59 annual fee, but there's usually a generous sign-up bonus that can more than offset this.
Another good option if you prefer to avoid paying an annual fee is the Bank of America® Travel Rewards card, which has no foreign transaction fee, a 1.5 points per dollar reward rate, and Bank of America customers, such as those who hold a checking account with the bank, can earn reward bonuses of 10% to 75%.
The Foolish bottom line
A Visa- or MasterCard-branded credit card with no foreign transaction fees and a solid rewards program could be an excellent travel companion for your next trip to Asia. Just keep in mind that credit cards aren't accepted everywhere in Asia, especially in certain countries, so plan accordingly.
Matthew Frankel owns shares of American Express and Bank of America. The Motley Fool owns shares of and recommends Mastercard and Visa. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.