What you need to know about using your credit card abroad

When you are traveling aboard, a credit card is an essential item to have with you.  It’s a convenient and safe way to make purchases.  But before you pack one of your credit cards for your international travel, make sure that you understand the fees associated with using your credit card abroad.  The card you use for everyday purchases might have high fees for these transactions that you should be aware of.

Making purchases abroad

There are two fees that could be associated with making purchases using your credit card:

• Foreign transaction fee.  This is a percentage of purchase you make, typically around 3% but varies by credit card.
• Currency conversion fee.  This is a fee that may be assessed if the purchase is converted into USD at the time of purchase. This doesn’t happen frequently, but some merchant may ask you if you want to see the transaction in USD.

Using ATMs abroad

Your credit card may not allow use at an ATM at all.  But if you find yourself having to use your credit card at an ATM as a last resort to get cash, know all the possible fees that could be associated with it.  Getting cash out of an ATM using a credit card is considered a cash advance.  Be aware there will be a cash advance fee, the cash advance may have a higher interest than the other types of transactions (and interest may start accruing immediately), and the ATM that you use may charge a surcharge fee.

All the fees and rates should be spelled out in the most current pricing/rate addendum to your credit card agreement, if you happened to have kept that!  But calling your credit card company to fully understand its fees might be the best option. 

Getting foreign currency

If you think you need some cash abroad, plan ahead.  In some countries, like Japan, credit cards may not be as broadly accepted as they are in the States.  It’s typically more economical to have the foreign currency exchange done while you are in the U.S. than looking for options at your overseas destination.  Check with your bank’s local branch.  Many of them will be able to order foreign currency for you but you will have to allow some time (e.g. 3-4 business days) to have the currency delivered to the branch to be picked up.  There may be fees associated with this service and the exchange rate may not be as favorable, so ask about those upfront.

Things to remember before your international travel

Before you leave for your international trip with your credit card, remember to do a couple of things:

• Call your credit card company to let them know about the upcoming trip, including when and where you are going.  Nothing is more aggravating than finding out your only credit card you brought with you has been declined at the point of purchase.
• Write down the phone number for the credit card company to take with you.  Some banks and credit unions offer a different phone number for reporting lost/stolen cards which typically offers 24/7 support even when your bank branch and call center aren’t open.  Make sure that you have this phone number as well.
• Pack another credit card or a debit card. If you have another credit card or a debit card, it might be a good idea to take it with you as a backup.  You can carry the backup card with you but you may want to store it in safe place that’s different from your primary credit card so they don’t get lost or stolen together.

Using your bank’s debit card abroad

A debit card that is tied to your bank account (like checking or money market accounts) can be another option to make purchases and get money out, but this also requires planning ahead.  You can typically use the card as long as you are not in a country that’s blacklisted. Be sure to call your bank in advance to:

• Let them know when and where you are going.
• Ask what the foreign transaction fees are for using the debit card for purchases.  
• Ask what the ATM fees are if you are to take cash out.  In addition to your bank’s fees, there will be an additional surcharge fee by the bank that owns the ATM.
• If the debit card is tied to a Money Market account, make sure you understand the additional restrictions for using it.   There may be a limit on the number of times you can withdraw per statement cycle or a minimum required balance in order to avoid the fees.

While some fees are simply unavoidable, or you may consider it as a price you pay for the convenience you get, do your homework before you travel so that you don’t end up with a ton of unexpected fees!

Do you have any other tips to share?

If you have any additional tips or insights on how to safely and cost effectively travel abroad with your credit or debit cards, please share in the comments below!

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