Using Credit and Debit Cards When Traveling Internationally

I remember being a child and seeing commercials on television about American Express Traveler’s Checks. Karl Malden would admonish us “Don’t leave home with out them.” I even found one of those old commercials on YouTube. https://www.youtube.com/watch?v=VB8_S0ZzRCQ

That was in the days before debit and credit cards became so widespread. While traveler’s checks are still a product that you can buy from your local bank, they’ve largely been replaced with the electronic currency available on our plastic cards. In this post, I’ll talk about how we’ve used credit and debit cards effectively when traveling internationally.

For starters, select the cards that will be most effective during your trip. Most modern cities (and even some that don’t seem so modern) have widespread credit card point of sale locations. They also have ATMs where you can withdraw cash in the local currency in case you can’t use your credit card. That said, your card is an effective payment mechanism in many places around the world and carries with it all of the protections that the Visa or MasterCard networks provide. It’s been our experience that either of these two card families are the best for traveling as they seem to be accepted in more places than Discover, American Express and Diner’s Club.

You’ll want to look at any fees assessed by your cards, whether credit or debit cards. Many cards assess a Foreign Transaction Fee, which means that every time you swipe your card or make an ATM withdrawal that this fee applies. The fee is somewhere around 2-4% of the transaction amount, so once or twice is no big deal. But if your plans are to use your cards as the primary payment mechanism, they can add up very quickly. Fortunately it is pretty easy to get a card with no foreign transaction fees, so just search for those using my CreditCards.com link at the right.

After you choose your cards that you plan to carry, you’ll need to contact the card companies that issued the cards you plan to carry. For your protection against fraud, they will want to know where and when you are traveling. They will place an exception on your account to use the card in those locations within the date range that you give them. This also includes any airlines, train, ferry or other instances where you might use the card. We learned this the hard way. We were traveling on Ryanair and did not know that they were an Irish-based airline so we did not tell our credit card company that we were visiting Ireland. Since we did not include Ireland in our travel plans, we could not use our credit card during the flight. We were trying to purchase lunch on the flight but were unable to because our credit card would not work and we did not have their local currency. Thankfully it was a short flight and I had some snacks in my backpack.

One of the worries that I used to have before traveling internationally was about money, in particular local currency. What if we needed British pounds or Mexican pesos but all we had was US dollars? The good news is that in tourist towns the US dollar is widely accepted, at least in our experience. That said, it never hurts to have local currency. Our first full day in England, we found ourselves needing a restroom break yet all of the “loos” were pay toilets. What’s worse, they were pay toilets that only took coins, yet oddly enough there were no change machines and nobody was willing to break a bill. Thankfully we found a store nearby (that didn’t have a public restroom) but we were able to make a small purchase and have the coins we needed. Thankfully, my fear was quickly averted, but it did teach us a lesson to have some local cash on hand.

We found in our research that ATMs seemed to be the best mechanism for getting local currency. Depending on your debit card and the availability of the ATM networks that your card supports, it’s possible to withdraw cash in local currency and the ATM do a real-time conversion for you. Some do not assess fees, while others may have a fee or a percent of the transaction added on. We’ve found that the closer you are to the airport, the more likely you are to encounter these fees because tourists are coming and going and feel compelled to get cash. Regardless, it’s usually much cheaper to get cash overseas in this way rather than using one of the money exchange kiosks.

When using your card internationally, some restaurants or stores will offer to process the payment in US dollars. I would advise against that for two reasons. First, since the conversion rate is applied before the transaction is processed, you get a less than favorable conversion rate. We were bit by that a couple of times. The first time at a restaurant was new to us. The cashier asked if we wanted the transaction to process in US dollars or Indonesian rupiah, and my husband chose US dollars. When he got the receipt and did the calculation he found that the conversion rate was bad. The second time it happened the store did it automatically without asking us, so now we make sure to tell them to process in the local currency. Second, whenever you swipe in a foreign country all transactions are automatically converted so that the market exchange rate is applied real-time. That said, your best bet is to make sure that the transaction processes in the local currency and let the network do the conversion for you.

Be sure to take all of the necessary precautions just like you would back home to prevent theft or fraudulent use. Don’t let the card out of your sight. Never enter your PIN unless you have to. Always shield your PIN entry from view. Use your cards only in safe, well-lit areas on machines that don’t appear to be tampered with. Use CHIP technology where available (and ask your credit card companies to set a PIN for CHIP transactions). We take additional precautions by carrying our cards separate from our wallet in a travel pouch. Both my husband and I carry a different card in case one is lost or stolen. And we have pictures of the cards and contact information for the bank stored separately in our in-room safe at our hotel.

Hopefully this helps answer some of your questions about credit and debit cards while traveling.