Whether you’re visiting another state or traveling abroad, your credit card could be put in more threatening situations than when used at home. You should always be aware of how you use and safeguard your…
Whether you’re visiting another state or traveling abroad, your credit card could be put in more threatening situations than when used at home. You should always be aware of how you use and safeguard your credit card information, even if you’re a seasoned traveler. Additionally, if you want to travel with some spending money, you have to decide where to withdraw cash, how much cash to carry, where to get the best exchange rate and what expenses to charge.
Use these strategies to keep your credit card safe when on a trip, while also squeezing as much value out of it as possible.
The Pros and Cons of Traveling With a Credit Card
Credit cards are often the best payment method to use when you’re traveling. Here’s why:
Exchange rates. Credit cards typically offer better exchange rates than what you’ll get if you exchange cash for foreign currencies or use an ATM. At the very least, use your credit card for large purchases like your hotel bill and rental car.
Travel insurance. Credit cards offer a great way to get some of your travel booking purchases covered in case you have to cancel your trip or your flight gets delayed. Plus, credit cards may offer rental car insurance, which can save you from having to purchase coverage with the rental car company.
Fraud protection. If someone steals your wallet, you’ll likely never see the cash again, and your debit card is tied directly to your checking account. With your credit card, though, thieves are technically using the credit card issuer’s money, not yours. With a credit card, fraudulent charges may be resolved before your statement closes. On a debit card, you’ll have to be reimbursed for fraudulent charges. Plus, many credit card issuers have a zero-liability fraud policy, which means you won’t be on the hook for any unauthorized transactions. Even if you are, federal law caps your liability at $50.
Rewards. If you have a rewards credit card, you can rack up points, miles or cash back with every purchase you make. Many credit cards earn rewards at a higher rate when used for travel purchases.
That said, using a credit card while traveling, especially internationally, doesn’t come without drawbacks. These are the cons:
Fees. Many credit cards charge a foreign transaction fee, which is typically between 2 and 3 percent of each purchase you make abroad. That might not sound like much, but it can add up on long trips.
Acceptance. There’s no guarantee your card will be accepted, even if your card issuer has a presence in the country you’re visiting. For example, merchants might decline American Express cards across the board, but must abide by the terms of their contracts with payment networks. And if your card doesn’t use the right payment network, such as Visa or Mastercard, or it doesn’t have a PIN to go along with your EMV chip, you may be out of luck.
Identification. You may need to provide identification for certain credit card transactions, which means you may need to carry your passport around with you everywhere.
While there are some downsides to using a credit card on vacation, there are ways to limit their impact. These strategies can maximize the value of your credit card and keep it safe.
Get issuer contact information. Credit card companies have gotten better and better at detecting fraud, so much that it’s generally not necessary to call to let them know where you’re going. In fact, American Express and Capital One don’t even allow you to create a trip alert anymore.
“I don’t ever call my credit card company when I’m traveling,” says Dan Miller, founder, writer and managing editor of Points With a Crew, a travel site focusing on helping families travel for free or cheap. “I can’t think of a time when I’ve ever had a problem from it.”
It may still be a good idea to call, though, to find out how to best contact the issuer if you’re overseas. Toll-free numbers typically don’t work outside the U.S. and Canada, so you’ll want a number you can call if you need help.
Also, you’ll want to set up a PIN with your card in case it’s required to make purchases.
Carry a backup card. If your primary card is an American Express or Discover card, you could have a hard time using it. Make sure you have at least one Visa or Mastercard credit card and consider having a second in case one gets stolen.
Gary Leff, author at frequent flyer site View from the Wing, says, “You can always lose a card, or a bank issuer could decline your card pending your verification of charges. Having more than one card is always a good idea.”
Keep some emergency cash. You could be stranded if a thief steals your credit cards or you lose your wallet. Keeping some cash stashed away in the safe in your hotel room could get you out of a mess.
It also may be wise to keep some cash on hand in a money belt for certain merchants. Street vendors, for example, may not accept plastic. And if a vendor who does accept credit cards seems sketchy, you may want to use cash anyway instead of giving them your card.
Get a credit card with no foreign transaction fee. Although many credit cards charge a fee on all foreign purchases, some of them don’t. For example, you won’t pay the fee with any Capital One, HSBC, Discover or USAA credit cards. Also, many travel-specific rewards credit cards from other card issuers don’t charge foreign transaction fees.
If you’re in a situation abroad where the merchant offers to charge you in your home currency, you may think that will waive the foreign transaction fee, but it doesn’t. Leff recommends declining an offer to charge you in your home currency if you’re traveling internationally. Usually you will benefit from being charged in the foreign currency by getting a better conversion rate.
“Merchants will charge you a fee or a less than generous conversion rate to do this,” Leff adds. “And you will still get charged that 3 percent because it’s a foreign transaction even if not a foreign currency transaction.”
Get a card with travel insurance benefits. Some credit cards offer a suite of insurance benefits to protect you in case something goes wrong. For example, some cards will reimburse you for certain clothing and hygiene costs if your baggage gets delayed or lost. Others might help pay for your meals and hotel bill if your flight gets delayed long enough.
Miller notes the Chase Sapphire Reserve has many travel perks. In addition to the above benefits, the Chase card also covers emergency evacuation and transportation if you or a family member gets sick or injured, plus reimbursement if your trip gets canceled or interrupted due to sickness, severe weather or other covered reasons.
Make your life easier with other travel benefits. Hopefully, you’ll never have to take advantage of your card’s travel insurance benefits. But some credit cards also offer other perks that can make for a better travel experience.
The Platinum Card from American Express, for example, offers a slew of benefits, including complimentary access to airport lounges, a $200 airline fee credit each year, $200 in Uber credits plus Uber VIP status, a fee credit for your application to Global Entry or TSA PreCheck, elite status at Marriott, SPG and Hilton hotels, and complimentary membership in premium rental car programs, which include upgrades and special discounts.
Also, hotel and airline credit cards may offer special perks when you travel with their brands. An airline credit card, for instance, may offer free checked bags, priority boarding and discounts on in-flight purchases. And a hotel credit card may offer a free night’s stay every year and elite status, which can come with better internet and room upgrades. As you consider different credit cards, look past the rewards programs to see what other value they can add to your travel experience.
Check your online accounts frequently. Even if you don’t have any suspicions that your credit card may have been compromised, it’s a good idea to keep an eye on your transactions just in case.
Also, hold onto your receipts so that you can reconcile your purchases with what you see in your account. If there’s something you don’t recognize, report it immediately to stop the fraud before it gets worse.
Set up automatic payments on your card accounts. Keeping up on your monthly payments may be the furthest thing from your mind when you’re enjoying a vacation. To avoid a late payment and create some peace of mind, set up your accounts on autopay before you leave for your trip. That way, you won’t have an unpleasant surprise waiting for you when you get home.
Leave your debit card at home. Your debit card likely has some form of fraud protection. But the legal protections aren’t as favorable as with credit cards. If you don’t notice the fraud for a while, for example, you could be on the hook for as much as the full loss amount.
“In any case, when funds are withdrawn from an account via debit card, those funds need to be restored in the event of fraudulent transactions,” says Leff. If you can’t make a rent payment or your credit card payment gets returned while you’re waiting to get your money back, you could get dinged with fees.
Practice Credit Safety Habits
Getting the right credit card with all the bells and whistles can make for a more enjoyable trip, but it may not matter if you don’t keep your credit card information secure. Here are a few ideas:
— Keep your wallet in your front pocket.
— Avoid using a purse that thieves can easily snatch.
— If you’re traveling with a companion, split cards between yourselves.
In addition to these tips, Miller argues they’re not enough and recommends “being aware of where you are, who’s around you and what dangers you might be in.” Situational awareness can be your best defense.