Warning: You’re Losing Money By Not Using Travel Credit Cards Effectively

If you’re not using credit cards while you’re traveling, you should start considering it.  Paying with a credit card comes with a ton of benefits:

  • Letting you track expenses
  • Reducing liability if a card is lost or stolen
  • Providing additional insurance and other benefits
  • Rewarding you in cash back or other methods

Whether or not you’re already using a credit card, using them effectively is another story.  It’s easy to fall victim to fees or end up trapped by bank policies.  However, with a few simple tips, you can take advantage of using credit cards on your next trip.

Choose Your Cards Wisely

Make Sure Your Credit Card is Widely Accepted

Not every card is accepted by every merchant, but Visa and MasterCard will give you a much broader option than cards like American Express, Discover, or Diner’s Club.

Consider Card Technology

In Europe, more and more places are only accepting cards with EMV “chip” technology.  Unfortunately, most U.S. banks don’t yet offer chip + pin options, but a chip + signature is better than nothing.  The Barclay’s Arrival Plus Card offers some pin abilities, but I still had some issues with it in the Netherlands.

travel credit card EMV
Look for EMV chips in your credit cards.

Additionally, be on the lookout for cards with RFID technology.  These credit cards allow you to pay by tapping your card instead of swiping it.  While you may think that’s more convenient, it allows your financial information to be more easily stolen.  Protect any RFID credit cards by carrying them in inexpensive Tyvex sleeves.

Avoid Credit Card Fees

Foreign Transaction Fees

Unfortunately, a lot of banks slap a “foreign transaction fee” to purchases made abroad.  Typically 3%, these fees can add up quickly on vacation.  Luckily, a lot of credit cards offer options specifically advertising no foreign transaction fees.  I highly recommend having at least one of these cards, even if you only use it internationally.

Be aware some cards without foreign transaction fees come with an annual fee.  You can still be money ahead if you pay an annual fee: you’d break even on a $95 one-time fee if you charged $3175 at 3% in charges…an easy target to hit, especially if you travel more than once a year.  However, some cards offer this benefit without an annual fee or with a first-year free, so shop around.  Even after the first year, I’ve had a lot of success asking for an annual fee waiver at the time of renewal.

travel money euros

Processing Fees

In some countries, local businesses may only allow credit card transactions if you pay a surcharge.  That’s a fee paid directly to the business — not your credit card — to offset their processing cost.  Always ask if there’s a surcharge, especially if you’re in a developing country.  I’ve personally been told fees were an additional 2-7%, which may make it beneficial to pay in cash.

Currency Fees

Officially known as dynamic currency conversion, some merchants will offer to convert your purchase to US dollars rather than charging you in the local currency.  That sounds convenient, but it usually comes with a cost.  When they convert the charge to US dollars, you can expect they used a lousy exchange rate.  For a fair, inter-bank exchange rate, you’re better off paying in local currency and letting your credit card do the conversion.

Hint: Even if you choose to pay in US dollars, your credit card will still see it as a foreign transaction and charge any applicable foreign transaction fees for a double whammy.

Be Prepared

Contact Your Credit Card Company

When you travel, your transactions are more likely to be flagged as fraudulent than when you’re home, putting you at risk of having your account frozen until you clear things up.  It’s easy to notify your bank ahead of time that you’ll be headed abroad so that they know these are valid purchases.  A simple phone call will always work, but some credit cards now have a travel notification option from your online account.

Pay Your Bill or Set Up Auto-Pay

When you’re on vacation, you’re unlikely to be setting time aside to pay your bills.  Accounts can be frozen if you miss a payment, so make sure you’re all paid up before you hit the road or that your auto-pay is ready to go.

Know What to Do When Cards are Lost or Stolen

Hopefully you’ll never have an issue with lost or stolen cards, but it’s better to be safe than sorry.  Make sure you have the phone number(s) from the back of your cards written somewhere so you can call and cancel a card if you need to.  I also like to have photos or copies of the card itself (with information like your account number) stored somewhere safe or with someone you trust back home.

Learn Card Benefits

Extra Perks

Some credit cards offer extra benefits, like primary car rental insurance, airline lounge access, or an allowance if your suitcase is delayed.  These perks can add up to real savings compared to buying things a la carte, but only if you know what your card offers.  Look for information in the mailing you were sent up when you opened your account, for a full description in your online account, or call a representative to go over the details.

Hint: You’re more likely to have valuable benefits if your credit card comes with an annual fee.  That $100 investment might save you triple that in the long run, making it a good deal (especially if you can get the fee waived by asking).

Rewards!

vacation fund tip jar
You may just get a free trip from your rewards!

There’s really no excuse not to be earning credit card rewards.  Earning 1% cash back is pretty standard, even on cards that don’t charge foreign transaction fees.  Other cards may offer higher cash rebates, frequent flyer miles, or hotel points.  As much as I hate to admit it, traveling can be expensive, so you may as well get a little something in exchange for those purchases.  You never know: it may just pay for your next trip.

Pack Wisely

Double-Up

It’s always a good idea to pack more than one credit card.  You may think that one “perfect” card is all you need, but you never know when someone accepts only Visa and you packed a MasterCard (or vice versa).  I’ve also had a card closed and reissued with a new account number while I was abroad because of a store data breach — leaving my original card worthless while I was traveling.  Don’t put all your eggs in one basket.

Have a Plan B

Sometimes, cash is still king, so it’s a good idea to carry cash around with you on a daily basis (in a reasonable amount) along with an ATM card.  I tend to carry enough cash in local currency for a meal and a taxi back to the hotel — plus any known cash expenditures.  I also usually carry another $20-50 in major currency, like USD or euros, in a separate place on my person.

charles schwab atm card
Highly recommended: Charles Schwab ATM Card

ATM cards can charge many of the same bank fees as credit cards, so do your research.  I can wholeheartedly recommend the free Charles Schwab Investor Checking Account + ATM Card for travel purchases: it’s been accepted at every ATM I’ve ever tried and it refunds all fees.  It’s not my primary bank, but it’s perfect for travelers.

Leave the Clutter at Home

If you’re the type of person who tends to walk around with eight credit cards and a million other things in your wallet, you may want to leave some of it at home.  Yes, it’s great to have options, but that opens you up to potential security issues.  If you know for a fact you won’t use it abroad, don’t even bring it.

The Bottom Line

I tend to travel with two specific cards: the Chase Sapphire Plus (for great benefits and decent rewards) and the Barclays Arrival Plus (for EMV technology + 2% cash back).  Between the two, I’ve got a great arsenal of travel credit cards and the choice to switch between Visa and MasterCard as necessary.  However, there are dozens of options, so look for a fit that works for you.

If you’re traveling, having a credit card is good way to prevent liability and take advantage of card benefits, but you have to be smart about it.

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5 thoughts on “Warning: You’re Losing Money By Not Using Travel Credit Cards Effectively”

  1. Thanks for the tip on the Charles Schwab account! I’m on the lookout for an account that doesn’t charge high ATM fees, so your post came just in time! I’d love to hear your comparison of the Chase Sapphire and Barclays Arrival Plus. I’ve decided on the second, but once we need to pay the annual fee, we might decide to switch to a different card. All in all, great post!

  2. @Jolanta, Not only does Charles Schwab not charge any fees, but they also refund any ATM fees (for example, if a 7-11 charges you $2 to withdraw money on top of normal bank fees). It’s great!

    As for the credit cards – I like the rewards better with Barclays. Cash is easy and often just as valuable as the Chase points. However, the service and added benefits of the Sapphire Plus have really paid for themselves in my experience. Barclays can be a hassle to deal with if you have questions or concerns about your account.

  3. Great info!!! I got a Chase sapphire card last year specifically for travel and the first year came with no fees. I had every intention of canceling but now I’ll ask them to waive the fee and maybe I won’t need to cancel it.

    1. @DeAnna, If they won’t waive the fee, you can also ask them to “downgrade” it to a no-fee card. Lower benefits/rewards, but possibly better than out right canceling depending on your needs.

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