As I’m about to travel abroad, I began looking into which of the credit cards in my wallet would be best to use for everyday purchases there.
Normally, we don’t spend much time focused on a credit card’s fine-print foreign transaction fee, but if you are travelling abroad to South America, Europe, Asia or anywhere else outside the United States — this information becomes quite vital.
You see, using your credit card on purchases in another country is often recommended (especially at hotels and restaurants), since you will be getting the interbank exchange rate — typically a better rate of exchange than you’d get by exchanging your US dollars at an exchange stand.
HOWEVER, many credit cards now charge a “foreign transaction fee” on every single one of these purchases, which usually is around 3% to 4%. Although this isn’t bad for a cup of coffee, if you spend $200 or $300 in a weekend, that added fee begins to pile up rapidly.
I recommend the Capital One Venture Rewards credit card, or any other Capital One card, for travel abroad: none of their cards carry foreign transaction fees. This is quite rare, and awesome. If you’re spending $2,000 per month abroad on your card, for example, you’d save $60 in foreign transaction fees each month. (You can also get 10,000 bonus miles, equal to $100 in travel, if you sign up here.)
Another popular option is to use a Discover-brand credit card while travelling abroad. Discover, along with VISA and MasterCard, are widely accepted card issuer brands throughout South America, Asia, and most European countries. Discover does not charge a foreign currency transaction fee on any of its card products. (See my favourite Discover credit card offer here — you can get 0% Intro APR for 15 months through that promotion.)
“Discover cards are currently accepted in multiple countries around the world through the Discover Network” and the company’s Network partnerships, which currently include China Union Pay, JCB, and Diners Club International.
Obviously, you will want to carry some cash with you to your destination, which you can convert into local currency at an exchange centre or local bank. This allows you to get around the city just in case any of your cards are temporarily frozen.
Secondly, you want to contact your credit card company and set up a “travel notification” with them, telling the bank which countries you will be in and on which dates. This way, they can set a note within their fraud system to prevent your charges down there from being flagged and declined.
David blogs about personal finance and credit at Credit Card Outlaw.
Disclosures: Outlaw is a credit card promotions site, and as such we maintain financial relationships with numerous banks and financial institutions, including offers and cards mentioned or featured herein.
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