5 Things to Know About Using Your Credit Cards Overseas

by Lyle Daly | Published on Sept. 25, 2021

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Woman holding her credit card and smiling while she dines in Europe

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Using credit cards abroad isn't quite the same as using them at home.

If you're planning a big trip overseas, one important item to sort out is how you'll pay for purchases. You might figure you can just bring your credit cards along and use them as you would in the United States.

You can do that -- and in fact, a credit card is a smart way to pay since you don't need to carry much cash. But there are some problems and additional expenses you can run into if you aren't prepared.

1. Some credit cards charge foreign transaction fees, so bring one that doesn't

A foreign transaction fee is a fee for purchases made with international merchants. The standard amount is 3%. With a card that charges that much, you'd pay an extra $30 on top of every $1,000 in spending abroad.

Fortunately, there are plenty of credit cards with no foreign transaction fees. Travel rewards credit cards generally don't charge them, and even some cash back cards don't have this type of fee.

Before you travel outside the country, check if your credit cards have foreign transaction fees. If you don't have a card without this fee, it's worth applying for one to save money.

2. You may need to notify your credit card issuer you're traveling

Some credit card issuers allow cardholders to set up travel alerts to let the card issuer know where you're going. That way, when you start making purchases in another country, they don't look like potential credit card fraud, and get blocked.

Several major card issuers, including Chase and American Express, have phased out travel alerts in recent years. You might find that you don't need to create a travel alert with your credit card. However, there are still many card issuers that use travel alerts. It's best to check in case yours does.

3. Visa and Mastercard are the most widely accepted card networks

There are four credit card payment networks: Visa, Mastercard, Discover, and American Express. You can see which network a credit card belongs to by looking at the logo on the bottom-right corner of the card. In the United States, all four networks are widely accepted. Most merchants that accept credit cards accept cards from all networks. That isn't always true overseas.

In terms of international acceptance, Visa and Mastercard are the best credit cards to have. Discover and American Express are working on wider acceptance abroad, but they're lagging behind.

4. Don't let the merchant convert the transaction to dollars

Some businesses abroad ask if you want to pay in the local currency or U.S. dollars. If you choose dollars, the merchant uses a feature called dynamic currency conversion to change the currency of the transaction.

This may seem convenient and help you keep track of expenses, but it's a bad deal. The merchant gets an exchange rate that's favorable to them. As the customer, you get the short end of the stick, and you may also get charged a fee for using the service.

It's always better to pay in the local currency. You get a much better exchange rate by letting your credit card issuer handle the currency conversion.

5. Many international merchants don't accept credit cards

Credit card acceptance is the norm in the United States, but it varies in other places. In general, big businesses usually accept credit cards. And in major cities, credit card acceptance tends to be high among merchants of all sizes. In small and mid-sized cities, it can be hit or miss. You may find that many businesses only accept cash and their own country's debit cards.

Carry some of the local currency with you just in case you need it. It's also a good idea to check online regarding credit card acceptance in the country you're visiting.

No one wants to have a credit card get declined on vacation or to come home to a bill full of extra fees. Now that you know more about using credit cards overseas, you can navigate your international trip without surprise issues.

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