Top 8 Tips for Using a Credit Card While Travelling Overseas

When preparing for a trip abroad, many individuals focus primarily on packing appropriate clothing and accessories. While this is important, it is also beneficial to consider which credit cards to bring along and how to use them safely. Credit cards not only offer a secure and practical payment option, but they also provide valuable benefits that can enhance your travel experience and provide assistance during unforeseen circumstances. By selecting the appropriate credit cards, you may be able to forego purchasing travel insurance and be confident, knowing that you are protected in the event of travel disruption.

When packing for an international journey, you need to carry credit cards that are widely accepted and offer generous travel rewards, as well as waive foreign transaction fees. Although it is possible to achieve this with a single card, it is advisable to have backup options on hand. This article highlights 8 tips for using credit cards while travelling overseas.

1. Carry widely accepted credit cards:

Visa and Mastercard are worldwide recognised credit cards. A business that accepts credit cards will probably accept your Visa/Mastercard. American Express and RuPay also have a global presence but are not yet as widely accepted. However, both credit card companies are trying to increase their overseas acceptance rates by collaborating with different banks and payment networks. However, it still makes sense to bring a Visa or Mastercard as a backup to avoid any inconvenience in a foreign land.

2. Inform your credit card issuer about your travel plan:

If your credit card account displays purchases that are thousands of miles away from your usual location, your card issuer may consider them fraudulent and decline them. To prevent any confusion or inconvenience, it is best to inform your card issuer of your travel itinerary beforehand. This can be done through the issuer's website, mobile application, or by calling the phone number provided on the back of your card. By notifying them in advance, your card issuer will be aware that the transactions are legitimate, and they will not get declined.

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3. Check the foreign transaction fee of your card:

Most credit card issuers charge a foreign transaction fee for purchases made overseas with a foreign merchant. These fees typically range from 1% to 3% of the purchase price and can cause you to pay significantly more than the listed price for anything you purchase abroad. This can become quite expensive throughout a trip. However, some credit card companies do not charge these fees at all.

Before travelling, it is advisable to check your credit card terms & conditions to determine if they impose fee on foreign transactions. If they do, it makes sense to apply for a credit card that does not charge foreign transaction fees. To ensure that you have sufficient time for the application process, account setup, and delivery of your new card, you are required to apply well in advance of your trip.

4. Check travel insurance protection:

One of the most significant benefits of having a credit card while travelling abroad is travel protection. Numerous issues may arise while you are out of the country, and travel insurance can assist you in recovering non-refundable travel expenses and obtaining assistance during an emergency. It is recommended to bring a credit card that includes trip cancellation and interruption insurance, primary rental car coverage, and baggage insurance. Several credit cards provide this type of travel insurance, so it is important to understand your preferred card's benefits and carry one that will provide coverage in the event of unforeseen circumstances. However, if your card does not offer travel insurance, it is advisable to purchase a travel insurance policy separately.

5. Avoid using dynamic currency conversion:

Dynamic currency conversion is a credit card feature that enables you to make purchases in a foreign country using your home country's currency. This conversion is carried out at the merchant, allowing you to see the exact cost of items in your home currency, regardless of your location. For instance, if you are in Paris and buying scarves and French soaps in Euro, you might wonder how much they cost in Indian Rupee. But with dynamic currency conversion, you can find out right away what the euro-to-rupee amount is.

While this may seem appealing, unfortunately, the exchange rate for dynamic currency conversion typically works out unfavourably for credit card users. If a foreign merchant offers you the choice of paying in your home currency or local currency, it is generally more economical to choose the local currency. If you wish to avoid dynamic currency conversion transactions altogether, you could opt to use cash instead. Foreign currency exchange rates offered by your local bank or currency converters are likely to be more favourable than those offered by DCC.

6. Take advantage of the credit card rewards:

You should review the travel benefits of each of your credit cards to make the most of them while travelling. This will help you choose the card that offers the maximum benefits for your trip, such as earning extra points for spendings like dining. Another way to earn maximum rewards is to book your flights and hotels through the credit card issuer's rewards portal. It will allow you to use your rewards points to pay for your travel. Furthermore, having a high-end travel credit card/s also provides access to airport lounges through programs like Priority Pass, which offers a range of complimentary facilities like food, drinks, and spa sessions. This makes it a great option for long international journeys.

7. Manage your credit card's international spending limit:

Despite taking measures to prevent overspending or misuse of your credit card, situations may still arise that are beyond your control. To avoid such scenarios, it is advisable to manage your credit card's international spending limit according to your needs. This can be done by activating, checking, increasing, decreasing, or deactivating your international spending limit through various methods such as internet banking, mobile app, online credit card account, or contacting customer service. By doing so, you can ensure that you stay within your budget and prevent any potential misuse of the card.

8. Carry adequate cash:

Although credit cards offer convenience and security while travelling, relying solely on them during a foreign vacation may not be the best approach. Cash can come in handy in such situations and even help you save money, especially if you don't have a credit card with zero foreign transaction fee. Cash is widely accepted and can help you avoid some of the transaction fees associated with using credit cards. Moreover, some places are still not equipped to accept electronic payments, which makes carrying cash as a backup essential.

Remember these tips when you travel with a credit card to maximise your rewards and ensure the safety of your transactions.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.