Credit cards can be problematic abroad for a number of different reasons, although they can be the currency of choice for specific situations. Situations that may benefit from a credit card are larger, more expensive purchases while traveling.
Carrying large amount of cash on a trip abroad can be a bit risky, but so can always expecting your credit cards to work with the technology or be accepted everywhere you may roam.
What technical problems could I face with my credit card?
The biggest problem U.S. travelers could face using credit cards abroad is the card readers not being able to read and process the credit card, according to USA Today. Unlike American credit cards that usually have a magnetic strip; many credit cards issued from other countries instead include a microprocessor chip encrypted inside the card. Commonly known as chip-and-PIN cards, the credit cards with microprocessor chips require the user to enter their pin number for a transaction, whereas that is not normally the case with credit cards carrying a magnetic strip.
Many businesses abroad have credit card readers and machines that work with the chip-and-PIN cards but not with the magnetic strips. This can be especially problematic if you are attempting to pay using an unmanned kiosk or gas station where cash is not an option and no employee is on hand to process your credit card any other way. Although some chip-and-PIN machines can still read magnetic strips, there is no guarantee any given machine will have that capability.
What countries use the chip-and-PIN credit cards?
Because they are considered safer and more secure, chip-and-PIN credit cards are showing up in more and more countries across the globe, USA Today reports. Countries that already use chip-and-PIN credit cards include much of Western Europe and other countries such as:
Places where American credits can be especially problematic include Parisian vending machines, London parking meters and gas stations, and toll roads throughout many European countries.
USA Today also reports American credit card companies and banks are hesitant to make the switch to chip-and-PIN credit cards because it would cost some $8.6 billion for the full conversion. Even if all U.S. financial institutions are not switching to chip-and-PIN credit cards, certain banks and businesses are looking into the technology. USA Today notes Wal-Mart is expected to include chip-and-PIN technology into their stores while Independent Traveler says some banks are testing credit cards that carry both types of technology but the credit cards are not yet available.
What other problems might I face using a credit card abroad?
Not every store or business abroad will even accept credit cards, according to International Traveler, so having cash on hand is a good idea so you have emergency funds when necessary. If you use credit cards abroad, you can also end up with hefty fees, such as finance charges for credit card cash advances if you don’t have emergency cash on hand. You may also be subject to a credit card late fee if you have not returned from your trip abroad with enough time to pay your credit card bill on time.
Calling your credit card company before any overseas trip is another good idea, International Traveler says. This way you can make sure what credit card foreign transaction fee you may be charged and if that fee is charged in American dollars, foreign currency, or both.
What are the benefits of using credit cards abroad?
Even with their potential problems, credit cards used abroad can have several benefits, International Traveler notes. Using a credit card abroad automatically means you will receive one of the best exchange rates available, the interbank exchange rates. Banks and other facilities that offer currency exchanges on cash and travelers checks often add on additional fees or offer a higher rate than you could receive using your credit card.
Security can be another plus using your credit card abroad, as you can call and cancel it if you have a lost or stolen credit card. Traveler’s checks also typically offer some type security while cash can be the riskiest when it comes to loss or theft protection. Cash may be the easiest to use in a wide variety of situations, but you will also never know when you may need the additional funds only a credit card could provide.
Use our FREE credit card finder to compare credit card rates and useful features whether your trip is abroad or around the block!