Traveling outside of the United States offers unlimited, wonderful experiences. But when you leave the country, the mighty United States dollar may not be as easy to use as it is at home. Whether you find yourself in need of Euros, Pesos, Pounds, Yen, or something else, follow these steps to safely pay when traveling abroad.
Credit Cards Are the Safest Option
Your best option to make a purchase abroad is your trusty credit card. Credit cards are the best option outside of the United States for many of the same reasons they are the best option at here at home. Here are a few benefits of paying using a credit card:
- Widely accepted – Visa and MasterCard are easy to use in almost any country. American Express and Discover card acceptance is more limited.
- Pay in either currency – Some stores can charge you in dollars (usually a bad deal), but your credit card can convert to any currency (usually a better deal).
- Best exchange rates – When you use a credit card, you get exchange rates set by the bank at home, which typically gives you the best retail rate possible.
- Secure – If someone steals your card information, they cant drain your bank account. You are not liable for fraudulent charges made on a credit card.
The combination of security and ease-of-use make credit cards the best way to pay when traveling. And, as a bonus, you still earn valuable miles and points for cash back or free trips in the future. Thats a win-win!
Beware of Credit Card Foreign Exchange and Transaction Fees
There is one major downside of using a credit card abroad: foreign exchange fees and foreign transaction fees. Depending on your card, some purchases could cost a little more if you use a credit card compared to cash.
Popular cards focused on travelers, such as the Chase Sapphire Preferred, Capital One Venture and Bank of America Travel Rewards card, do not charge foreign transaction fees. However, some cards charge up to three percent in exchange fees. Using a card that charges this fee outside the United States should be avoided when possible.
Get Cash From the ATM, Not Exchange Booths
Not every restaurant and shop takes plastic, so be ready to use a little cash when traveling from time to time. Some countries, for example, India, are much more cash reliant, and credit cards may not be widely accepted or practical.
In this case, try to get cash from an ATM. The worst exchange rates come from exchange shops, sometimes called Cambios, where you can trade dollar bills for other currency. Be aware that exchange stores work in a pinch, but offer the least attractive rates. Exchanges in the airport are the worst offenders.
Getting cash from an ATM gets you a similar rate to using a credit card. Avoid carrying too much cash at once to protect yourself in case a pickpocket gets too close. Also, be aware that many foreign ATMs require a security chip to function properly.
Look Out for ATM Fees and Bad Exchange Rates
Some banks do not charge fees for using outside or public ATMs. While ATM usage fees are less common outside of the United States, they do happen. Check with your bank to see if you get charged for using other banks ATMs before you travel so you dont get hit by a big surprise when you get home.
Avoid Debit Cards for Purchases
While debit cards are one of the most popular ways to pay in the U.S., avoid using your debit card abroad. This is for a combination of costs and security.
If someone steals your debit card or debit card information, they can immediately make charges directly from your bank account. While you can usually get this money back, it can take months.
Also be aware debit cards may charge foreign transaction and foreign exchange fees just like most credit cards. This makes paying with debit both risky and expensive when traveling.
Have Your EMV Chip Enabled Card Ready to Go
Those little security chips that started showing up on American credit cards over the last few years have been popular in Europe and many other countries for more than a decade. The chips are formally known as EMV chips, which stands for Europay, MasterCard, Visa, the three card issuers who created the security chip standard.
When shopping abroad, you typically need an EMV chip to pay with a card at any self-service kiosk, self-checkout or ATM. Security chips do a lot to keep fraudsters from using your card, so think of this is a benefit of using your card abroad. You might also find the process a little faster than at stores in the U.S.
If you have a no fee, chip-enabled credit card in your pocket, you are good-to-go in most major cities outside of the United States. Knowing you are safe and saving money on fees, you can swipe (or dip) away without worry and focus on the most important part of your travels: enjoying your well-deserved vacation!