Credit cards make traveling much simpler by eliminating the stress associated with handling cash and currency conversion rates. They also provide added protection from theft or loss while abroad.
Be careful: credit cards can become dangerously tricky if used irresponsibly. Here are several key details you should be aware of before traveling with them.
1. You’ll be charged interest on any unpaid balance
Credit cards can be an effective tool for stretching your spending power and managing debt, but their misuse can lead to serious trouble. Interest charges quickly accrue when purchases made with your card don’t payoff by their due dates; especially if any balance from one billing cycle continues onto another billing cycle.
Credit cards provide several advantages when travelling; one being that it makes reserving car rentals or hotel rooms much simpler with credit than with cash, as well as offering better exchange rates than banks or bureaus can.
2. You’ll be charged a foreign transaction fee
Foreign transaction fees are charged by your credit card issuer when making purchases in foreign currencies, typically between 1% to 3% of total purchase amounts.
Some banks add an exchange rate markup, known as dynamic currency conversion, making the final price seem more expensive than it should. To avoid foreign transaction fees and save on costs altogether, the best solution is using a credit card that waives these costs while purchasing goods and services only in local currency.
Experian CreditMatch’s marketplace can help travelers locate cards without foreign transaction fees – perfect for travelers as these cards also offer other travel benefits such as generous rewards, zero annual fee and protections against credit card fraud. Unfortunately, however, approval may require excellent credit – to increase your odds of approval for one that waives foreign transaction fees, check your credit score with Experian to see which cards may fit the bill!
4. You’ll be charged a foreign exchange fee
Foreign exchange fees are levied by card issuers to cover the costs associated with making purchases in different currencies. Although typically just a small percentage of your purchase amount, these charges can quickly add up over the course of your trip if multiple transactions take place at once.
These fees may also apply when making purchases made domestically from international websites, though this is less likely. To avoid incurring these additional charges altogether, select a credit card without such fees attached to it.
Relying on plastic when travelling has its advantages, yet still poses certain disadvantages. While using credit cards can help with booking hotel rooms and rental cars as well as taking advantage of travel-related perks, it is wise to carefully weigh all costs involved before deciding to use one when travelling abroad. By choosing one without foreign transaction fees you could potentially save money; alternatively it might be beneficial to pay in local currency whenever possible for better exchange rates than when paying with US dollars.
