How to Think About Your Credit Cards When Traveling Abroad

While my husband and I were backpacking through Europe in our early twenties, I got a frantic email from the father of an old friend. Apparently my friend was also traveling in the same part of Europe as we were, and had forgotten to notify her credit card providers about the trip. All her cards were frozen and she was stranded with no money.  

To this day, I remember that story every time I’m about to leave the country. It’s easy to take your credit cards for granted, but one day in a foreign country with no access to funds will keep you forever grateful for the plastic in your pocket. Everything worked out for my friend in the end, but not before she’d spent the better part of a day freaking out. 

Traveling abroad carries with it all sorts of potential credit issues. Some are just mildly annoying, but some can leave you stranded in Amsterdam, relying on the help of a broke friend you haven’t seen since high school. To avoid those issues and everything in between, here are some tips for using credit abroad. 

Bring the Right Card 

Credit cards may look the same, but they aren’t all treated the same abroad. Visa and MasterCard are the most popular and are likely to work with most vendors. American Express and Discover are less common and more likely to be denied. 

Go through your wallet and bring at least one debit card and two credit cards, one from Visa and one from MasterCard if possible. You should also bring some cash in case your debit card doesn’t work for the first day or so. Having more options will prevent you from ending up stranded somewhere without access to money. 

Contact Your Card Provider 

You need to give your card provider advance notice when you travel outside the country. They may freeze your card if you don’t do this beforehand, because it will look like someone stole your card and used it without permission.  

Call your card company’s customer service number and tell them where you’ll be going and how long you plan to stay. Make sure they know which countries you’ll be traveling to if your trip includes multiple locations.  

You might be able to fill out a form for this online, but it doesn’t hurt to double check over the phone. Write down your card’s international customer service phone number in case the card is frozen and you need them to activate it abroad. 

Find a Card with No Fees 

Many cards charge a 2-3% foreign transaction fee when you use them abroad. A $50 souvenir, for instance would cost $1.50 extra in foreign transaction fees. That may not sound like much, but take that fee and apply it over a week’s worth of purchases. A trip with $1,000 in discretionary spending would cost $30 in foreign transaction fees. That’s the cost of an Uber ride from the airport or nice bottle of wine. 

Go through your credit cards and find which ones have no foreign transaction fees. These are more likely to be your travel and other rewards cards. Consumers who don’t have a card with free foreign transactions might benefit from applying for one.  

These cards usually have other useful travel benefits, like free trip cancellation or interruption insurance, baggage delay insurance and free checked bags. Give yourself at least a few weeks before your trip for your card to arrive. 

Be Aware of Security 

When I interned in London, I often used my debit card for purchases if I didn’t have any cash. Once, the cashier did something I never saw anyone do in the U.S – he compared the signature on the receipt to the signature on the back of the card. 

I was so confused. Why was he checking my signature? When I asked, he said it was fraud prevention. My chicken scratch didn’t quite match my perfectly signed name on the card, so he almost denied the transaction. 

Europeans are notoriously more wary of credit card security than their American counterparts. After all, Europe was first to institute chip-and-pin credit cards. 

Always make sure your signature on the receipt is similar to your signature on the credit card. It might also be worthwhile to have an ID with you at all times. In some countries, it’s mandatory. This can be your passport, passport card or driver’s license. A photocopy of your passport may also work. 

Pay in Local Currency 

One of the hardest parts of budgeting abroad is calculating the exchange rate. That’s why some restaurants, vendors and hotels offer to settle the bill in your own currency.  

This might sound like a nice convenience, but it’s actually a way for the merchant to charge an extra processing fee, known as dynamic currency conversion. This can cost up to 10% more. Plus, if you have a card with foreign transaction fees, you’ll pay more because your total balance will be higher. Always choose the local currency option when you’re given a choice, and you’ll almost always pay less. 

Be Wary of Your Balance 

Most of us want to splurge when we travel, especially for a once-in-a-lifetime trip to Paris or Rome. That’s understandable. 

But racking up a huge balance on a credit card can have some negative consequences. How much you spend on your card relative to your available credit line has one of the bigger impacts on your credit score. A high utilization percentage can make you lose a few points. 

If you put $3,000 on your credit card during your trip to Ireland and have a $5,000 credit limit, your utilization percentage will be 60%. The maximum utilization percentage you really don’t want to exceed is 30%. Having a high balance may ding your score until you pay it off. 

An easy way to avoid this problem is to pay off some of the balance before the statement closes. Figure out what date your statement closes and pay off just enough of your balance to knock it below the 30% threshold.