Credit and Debit Card Tips for Overseas Travelers

Heading for an overseas holiday or travel adventure?  Be sure to pack a credit card or two. And don’t forget your trusty debit card.

Paying by plastic while traveling abroad is quick and convenient, and you’ll land a nifty exchange rate on every single transaction you make.

When you pay by credit card, you receive the wholesale exchange rate reserved for the big banks and corporations rather than the more expensive retail rate offered to consumers.  You get this same excellent, wholesale exchange rate when you pay by debit card or withdraw cash from an ATM.

Bring your American dollars or traveler’s checks to a currency exchange counter or overseas bank and you’ll be stuck paying the higher retail exchange fees, plus additional fees, which can be considerable, especially at currency exchange counters.

So on your next overseas trip, reach for those little plastic cards whenever you pay and you’ll be treating yourself to the best exchange rate available.

However, as nice as it is to land a good exchange rate on your overseas credit card purchases, you’ll still need to watch out for fees.

Visa and MasterCard charge a one percent fee on overseas card transactions, and most credit card issuers pass this fee on to their customers. Plus, many card issuers tack on additional fees of one or two percent.

So you could be paying as much as a three percent fee on every credit card purchase you make while traveling.  Here’s how it happens.

When you make a purchase with a credit card in another country, you pay the merchant in local currency. If you’re in Mexico, you pay in pesos. If you’re England, you pay in British pounds.  But the charge that shows up on your credit card bill is in U.S. dollars.

Let's look at an example. Let’s say you take your credit card to Japan. When you hand your card to a waiter in a restaurant in Tokyo, you are paying for your meal in Japanese yen. Your credit card statement will list the cost of your dinner in U.S. dollars.

Visa or MasterCard converts the cost of your meal from Japanese yen to U.S. dollars and charges your bank a one percent currency-exchange fee for the service. Many banks pass this one percent fee on to customers and add one or two percent fees of their own.

That’s why it’s important to choose the credit cards that you travel with carefully.  Before your next trip, call each of your credit card companies and ask about fees on overseas transactions.  Fees vary. While smaller banks and credit unions tend to charge lower fees, some larger issuers limit overseas fees to just one percent.

Pack the credit card with the lowest currency conversion fee for your next overseas trip, plus a backup credit card.  A backup credit card will come in handy if your other credit card should be lost or stolen.

Before you leave on your trip, be sure to call your card issuers and tell them about your travel plans. Let them know the travel dates and the countries and cities that you’ll be visiting and when you’ll be returning to the United States. 

That way your bank will know that it’s you and not a thief making all those credit card purchases in Paris.  If you don’t give your bank the heads up about your trip, they could put a freeze on your card and you won’t be able to use it.  And nobody needs that kind of hassle, especially on vacation.

Be sure to ask your credit card issuers for an international contact number before you leave the States.  You won’t be able to call an 800 number once you’re outside the country.  So you need to track down a customer service number with an actual area code.

You’ll want to make a similar phone call to the bank that issues your debit card.  Tell the bank your travel dates, ask for a number you can call while traveling overseas, and ask about fees.

Some banks charge one to three percent fees on debit card transactions made outside the country.  Others may charge fees ranging from $2 to $5 per ATM withdrawal. 

Because fees can make ATM withdrawals quite pricey, try to limit the number of withdrawals you make during the trip.  Rather than withdrawing cash every day, make one or two larger withdrawals per week.  

The websites of Visa, MasterCard, and American Express list ATM locations in countries around the world.  So you’ll be able to track down overseas ATMs before you even leave the country. And many major international airports have ATMs, so you may be able withdraw some local cash as soon as you arrive.

Be sure to test ATM cards before leaving the country, and make sure you have a four-digit, numeric personal identification number for your card. Many ATMs outside North America do not have letters on the keyboard or the letters appear in a different order.

If you end up extending your overseas holiday, be sure to call your bank and credit card issuers and let them know.  That way they won’t be worried when additional charges start popping up in Rome or Amsterdam or Madrid.  They’ll know it’s you – savoring a travel adventure just a little while longer.