5 Tips for Using Your Credit Card Overseas

5 Tips for Using Your Credit Card Overseas

You're probably accustomed to using your credit card when shopping or eating out, especially if you're used to earning rewards such as cash back, miles, or points. But now that you're ready to travel internationally, you may feel a little less confident about your normal shopping habits. Will your credit card charge you foreign transaction fees every time you use it? What if your card gets declined? Isn't it easier to just pay in cash?

Cash may work for incidental expenses such as tipping, but you'll still want to use a credit card for accommodations, car rental, and other large expenses. Charging it will be an even better option for you if you use a credit card with no foreign transaction fees while you travel overseas. This perk can help you save money, maximize rewards, track spending, and more. But before you board, learn about your credit card options for international travel carefully--and do the following--because not every credit card offers comparable benefits.

1. Compare cash and credit for overseas spending

Currency exchange fees can affect your spending power when you travel overseas. This is especially true if your trip will last for an extended period of time, or if you're visiting an expensive destination. Your credit card can make spending convenient for most purchases, and it may save you money on foreign transaction fees, too.

In case you want to keep cash on hand for smaller expenses, it pays to plan ahead. Your bank may be able to exchange Philippine Pesos for foreign cash, but plan the swap several business days in advance of your departure. You may also be required to pay a fee to make the exchange. Because this fee is often a percentage of the amount you wish to convert, exchanging a large sum could cost more than you plan to spend. For example, if you want to exchange an equivalent of Php50,000 to a specific currency with 3% currency exchange fee, you will have to pay Php1,500 more. On the other hand, if you use a credit card with no foreign transaction fees to make purchases while traveling overseas, you could save on these fees and possibly earn rewards from those purchases at the same time. Here are a few more things to consider when using cash or credit overseas:

Safety - transaction confirmation. While having real physical money is convenient and reassuring, using your credit or debit card for certain transactions may prove to be helpful, safe, and secure. For example, using a card to buy that expensive leather bag provides safety and security through transaction confirmations either through SMS or PIN codes. You are also assured that the transaction you've made using your card with the selling establishment is secure and legitimate.

Convenient. Using your credit or debit card when traveling also provides an endless amount of convenience because you don't need to go around carrying bills and coins in your wallet. It also saves time and effort because it eliminates the need to give actual loose bills or coins for change. However, you also have to be vigilant and careful about where you use your credit or debit card since some stores or ATMs are hit with skimming devices, which will make you vulnerable to financial fraud.

Travel insurance. Card-carrying travelers for certain banks and financial institutions also enjoy perks, particularly travel insurance. There are specific kinds of credit and debit cards that provide travel insurance coverage to its clients and cardholders. This insurance covers not just yourself, but also your immediate family members.

Earn points, discounts. Using your credit or debit card, compared to having just cash, earns you points and lets you avail of discounts that will definitely help you enjoy your travel experience. This is useful, especially for Filipinos who like to shop for pasalubong for their loved ones.

Track your expenses. Another advantage of using a debit or credit card when you travel is that you can track your expenses in the most secure and convenient way possible. There are banks with user-friendly mobile applications where clients and cardholders can check their transactions and expenses in real time.

2. Check your credit card perks

In the excitement of planning an overseas trip, it's easy to forget other ways your credit card might help you. Access to members-only airport lounges and early boarding may be some of the amenities that can help you relax at the same time.

Find out if your credit card gives you free lounge access in airports here and abroad, and how wide your credit card company's lounge network is internationally. These travel lounges give you a comfortable place to rest, good food to eat, and have outlets for you to charge your phones and other gadgets. Others even have shower rooms where you can freshen up and game rooms to pass the time.

See, also, if your credit card offers discounts or any other perks on shopping, dining, accommodations, and other transactions in the country you are visiting and traveling in. Citibank, for instance, offers Citi World Privileges where you can enjoy a host of benefits, discounts, and recognition at over 4,000 different establishments in 30 countries.

3. Manage foreign transaction fees

Notify your bank that you will be traveling - where you will be going and when - so that (a) they can look out for suspicious transactions and (b) so that your card won't be declined. Banks tend to look at spending patterns and can flag anything out of the ordinary.

4. Learn how to use your credit card abroad

Filipino consumers are just getting used to dipping their cards instead of swiping, but in Europe and elsewhere, shoppers have been dipping (and possibly entering a PIN) for years. That means you'll need to make sure your credit card has a chip before you depart, since foreign checkout clerks may not know what to do with a magnetic stripe (mag-stripe) card. If you have a mag-stripe credit card or a chip-enabled card, keep local currency with you at all times. Unattended payment stalls in locations such as parking garages or toll booths, for example, may not accept these cards.

You should also be prepared in the event a merchant declines your credit card. If this occurs, and you have plenty of available credit, and your account is otherwise in good standing, then fraud protection may be the cause. If you normally make in-person transactions in Manila and it's your first visit to Hong Kong, you could experience a declined transaction-and even a locked account. Call your credit card issuer in advance of your travel dates to help prevent inconvenience and embarrassment. You may be able to avoid unnecessary disruptions by alerting your credit card issuer of your travel plans, whether abroad or domestic.

It also can't hurt to verify if locals at your destination use credit cards regularly, especially if you're traveling off the beaten path.

5. Earn rewards on overseas credit card spending

Are you excited to use your credit card overseas because you're anticipating earning plenty of rewards? Most credit and debit cards that Filipinos now carry are affiliated with international payment networks like Mastercard® and Visa, which are used all over the world. Check if your credit card provider has special deals for overseas spending like air miles, duty-free shopping, or discounts.

Finally, read the terms and conditions before you go, as your credit card issuer may award points, cash back, or miles only for domestic spending.

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