1. Shop around
Credit cards are not all the same—you’ll need to do a little research to find the best card for you. Read the fine print to save yourself from bloated surcharges. Most major credit card companies charge a foreign transaction fee of 2-5% on any charge made internationally. Call your credit card company before you go away—fees change often and you don’t want to be stuck charging the majority of your trip on a card with hefty fees. Capital One does not currently charge additional fees for international transactions. As well, you might find smaller banks and local credit unions charge lower rates. After checking these rates, check the exchange rates are consistent with your other cards. Interested in how conversion rates affect the end price of something you buy abroad? Visa’s currency converter (www.corporate.visa.com) might be helpful.
2. Notify your credit card company before you travel
Otherwise, your credit card company might put a hold on your card due to “unusual” activity—like a charge for a restaurant in Krakow. By calling ahead, the company may append a memo to your account. Hopefully your call will prevent a needless interruption of your shopping spree along Paris’s Avenue Montaigne.
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3. Know your numbers
Record all your credit card numbers—as well as the phone numbers to call if your cards are lost or stolen—in a safe place so you’re prepared should something go wrong. Both MasterCard and Visa have general numbers you can call (collect if you’re abroad) if your card is lost, but you’re better off calling the number of your issuing bank since MasterCard and Visa usually just transfer you to your bank; your bank’s number is usually printed on your card.
4. Be aware of chips and pins
Many European countries have adopted credit cards with embedded chips; purchases are confirmed with a pin, not your signature. If you have a traditional card with a magnetic strip or a chip card that requires a signature, you might have difficulty making purchases from automated machines, like ticket machines. You will need a human being’s intervention, like a teller at a ticket window, so that you may sign for the purchase.
5. Deal in local currency
Before you charge something, ask the merchant whether or not he or she plans to do a dynamic currency conversion (DCC). In such a transaction the credit-card processor (shop, restaurant, or hotel, not Visa or MasterCard) converts the currency and charges you in dollars. In most cases you’ll pay the merchant a 3% fee for this service in addition to any credit-card company and issuing-bank foreign-transaction surcharges. This is an option—speak up to avoid these hidden charges. American Express card carriers needn’t bother; DCC is not offered at all.
6. Keep track of dates
If you are traveling in an area where the currency tends to fluctuate wildly, you might want to note the transaction date of your purchase. Shifty merchants will sometimes wait a few weeks (or months) to submit the charge to your credit card company in hopes of getting a better exchange rate. Your credit card statement shows both the transaction date, which is the date you made the purchase, and the posting date, which is the date the merchant presented your card company with the charge. If something seems wrong, call your credit card company and ask them to research the transaction.
Swipe, swipe. Our well-traveled Talk forum posters know the drill—but their experiences do vary. Find travel money management on the forums:
“Try to open a checking account in a Credit Union at home if you still have time to do so and use their card, which does not charge the 3% to withdraw from your balance.” – TuckH (more)
“As the value of the American dollar weakens does anyone recommend converting American $$ to Euro now for a trip to Italy in November?” – ChanB (more)
“Almost all retail places wil take credit cards. One thing to be careful of is that more places (especially in Venice) are doing this “dynamic currency exchange” thing. If you charge something and the bill/receipt is in US dollars, you will be paying an obscene “conversion” rate.” – plafield (more)
For more tips on managing your money while traveling, see our Money Matters feature.
— Katie Hamlin
Photo Credit: Tomaz Levstek