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5 things to know about using your credit cards abroad

If you are planning a big trip abroad, an important item to consider is how you are going to pay for your purchases. You might think that you can just bring your credit cards and use them just like you would in the United States.

You can do it – and in fact, a credit card is a smart way to pay because you don’t have to carry around a lot of cash. But there are some additional issues and expenses that you can run into if you are not prepared.

1. Some credit cards charge an overseas transaction fee, so bring one that doesn’t

Foreign transaction fees are fees for purchases made from international merchants. The lump sum is 3%. With a card that charges that much, you would pay $ 30 more on every $ 1,000 spent abroad.

Fortunately, there are many credit cards with no overseas transaction fees. Travel rewards credit cards usually don’t charge for them, and even some cash back cards don’t have this type of fee.

Before you travel outside the country, check if your credit cards have foreign transaction fees. If you don’t have a card without these fees, it’s worth applying for one to save money.

2. You may need to inform your credit card issuer that you are traveling.

Some credit card issuers allow cardholders to set up travel alerts to tell the card issuer where you are going. That way when you start shopping in another country they don’t look like potential credit card fraud and get blocked.

Several major card issuers, including Chase and American Express, have phased out travel alerts in recent years. You might find that you don’t need to create a travel alert with your credit card. However, there are still many card issuers that use travel alerts. It’s best to check in case yours does.

3. Visa and Mastercard are the most widely accepted card networks

There are four credit card payment networks: Visa, Mastercard, Discover, and American Express. You can see which network a credit card belongs to by looking at the logo in the lower right corner of the card. In the United States, all four networks are widely accepted. Most merchants that accept credit cards accept cards from all networks. This is not always true abroad.

In terms of international acceptance, Visa and Mastercard are the best credit cards to have. Discover and American Express are working towards wider acceptance overseas, but they are lagging behind.

4. Don’t let the merchant convert the transaction to dollars

Some overseas companies ask you if you want to pay in local currency or in US dollars. If you choose dollars, the merchant uses a feature called dynamic currency conversion to change the currency of the transaction.

It might sound convenient and help you track your spending, but it’s a bad deal. The trader obtains a favorable exchange rate. As a customer, you get the short end of the stick, and you may also be charged a fee for using the service.

It is always best to pay in the local currency. You get a much better exchange rate by letting your credit card issuer handle the currency conversion.

5. Many international merchants do not accept credit cards

Acceptance of credit cards is the norm in the United States, but varies in other places. In general, large companies generally accept credit cards. And in major cities, credit card acceptance tends to be high among merchants of all sizes. In small and medium-sized towns, this can be hit or miss. You may find that many companies only accept cash and debit cards from their own country.

Take some local currency with you in case you need it. It is also a good idea to check online for credit card acceptance in the country you are visiting.

No one wants to see a declined credit card on vacation or come home with a bill full of extra fees. Now that you know more about using credit cards abroad, you can navigate your international journey without unexpected issues.