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Using Credit Cards Abroad

Using credit cards abroad is probably my favourite way to pay for expenses. Not only do I get a record of my purchases (which I can see online), but I also avoid ATM and debit charges, and I don’t have to carry large amounts of money with me when I’m travelling. Additionally, if my card is stolen and fraudulent charges made (which has happened three times to me over the past couple of years), I won’t be liable for any of the charges.

Having a credit card when you’re traveling is mandatory. You will need it to book flights, reserve accommodation, rent a car, and make most online purchases.

However, using a credit card is not free, and you will need to understand how your credit cards work when you use them outside of your country.

Credit card companies charge a foreign currency conversion fee to consumers that use their credit card overseas. This fee helps to offset the cost incurred by the credit card company and the bank, since international transactions are most expensive to process than domestic transaction. Research your credit card fees thoroughly, as foreign currency conversion fees can vary between cards.

For example, my preferred credit card is the MBNA Rewards MasterCard. All transactions made in a foreign currency will be converted to Canadian dollars. Then, an amount equal to 2.5 per cent of the converted transaction amount will be added to the total.

Here are a few other tips you will need to know when using credit cards abroad:

  • Inform your credit card company of your travel plans. Nothing would be more frustrating than having your credit card declined and suspended for suspicious use, because you didn’t take the time to let the card issuer know of your overseas travel plans.
  • Avoid Dynamic Currency Conversion. Foreign merchants will sometimes try to take advantage of tourists by offering to quote the final price of your purchase in your home currency, instead of in the local currency. The exchange rate is selected by the merchant, and is usually much higher than that of your credit card.  Make sure you know the currency conversion rates before you buy anything, or download a smartphone app that will do the conversion for you.
  • Double-check your card expiration date. Your trip could take a serious nosedive if you suddenly discover that your credit card is set to expire while you’re traveling. Contact customer service to see if they can issue you a card with a new expiration date, or mail you a new card to your address abroad, closer to when the card will actually expire.
  • Stick to using one credit card (but bring a back-up). Using a single credit card will make it easier for you to track your spending while you are away. But, you should also bring a back-up credit card just in case of an emergency – such as, your credit card being suspended, or losing your wallet. The back-up card should be stored somewhere else besides your purse or wallet – like in a safe in your hotel or hostel room, or in a money belt if you need to have it with you.