“Procrastination is like a credit card: it’s a lot of fun until you get the bill.”
3 Tips for Using US Credit Cards Abroad
This blog was written before the COVID Pandemic. The COVID epidemics played havoc on the travel business. In 2022, Fifty Plus Nomad decided to focus on traveling and living in Mexico and language learning posts. We will only update these long-term travel-related posts on a time-permitting basis. We would appreciate your comments and updates on these posts.
- Though credit cards are often justifiably criticized in the financial press, having an airline-branded credit card is essential for getting frequent flyer miles. Most Fifty Plus Nomads should try to maximize their frequent flyer miles to travel long-term or live abroad. Using Citibank and Chase travel cards (Chase is United Airlines and Citibank an American Airlines partner), I flew for minimal costs over 25 times during my round world travels between 2011 and 2015. While the rules are more strict than previously, earning credit card frequent flyer miles is still worthwhile as long as you don’t carry a balance. Find out more hints in the frequent-flyer-related posts noted at the end of this post.
- More and more frequently, credit card companies will give you an option that reads something like: ¨Do you want to accept or decline the option that the bank makes a currency conversion (from the local currency back to your home currency) for you?¨.
- Decline this offer. If you accept the offer, the credit card company may convert your withdrawal to US Dollars using the dynamic conversion rate. (If so, you will pay 7-8% more for the withdrawal than you would otherwise). Sometimes banks will disclose their foreign conversion fees when you make your credit card purchases, particularly in Europe. Usually, in this case, the fee is three percent. You may want to consider these fees if your credit card charges a currency exchange fee. (However, it is better to get a credit card without foreign transaction fees).
Tip #4: Avoid Credit Card Foreign Transaction Fees
Finding credit card companies that do not charge foreign transaction fees is relatively easy since many banks have credit cards that waive foreign exchange fees. Besides, most credit cards associated with an airline or a hotel (i.e., Chase-United and Citibank-American Airlines cards in the USA) come without a foreign transaction fee. (The only airline-branded card with a foreign transaction fee I’ve seen is the Southwest Airline Chase Card).
Foreign Transaction fees range from 1% to 3% of each purchase. While this doesn’t sound like much, I’d estimate that I saved around $20,000 using credit cards without foreign transaction fees during my around-the-world travels and expat life in Mexico.
It is generally not a good idea to make a withdrawal from an ATM with a credit card. Most credit card companies charge currency exchange fees on these withdrawals and treat the withdrawal like a cash advance. Cash advances come with fees (up to 5%) and high-interest rates.
If the bank charges a hefty currency exchange fee, try to minimize your credit card use by withdrawing money from your ATM card. Then, use that money for all but your most significant transactions.
Tip #5: Avoid Getting your Credit and ATM Cards Frozen While Traveling
Many banks will not allow you to take money out of your account or make credit charges overseas if they sense that a transaction could be fraudulent. While there is no exact way of determining when banks will cut you off, it usually occurs when you:
- Make multiple, substantial withdrawals in a short period.
- Have not traveled much before.
- Have not traveled in a while.
Fortunately, you can usually get the bank to unfreeze your account easily by phoning them. (Most cards have an overseas telephone number on the card itself). Remember that, while many banks have 24-hour telephone lines, they may deal with problems like this only during work hours in your home country.
It would be best to let the bank or credit card companies know your travel plans in advance to avoid these problems. (Note: Since I travel so much, my banks and credit card companies have told me that I no longer need to advise them of my travel plans. I have found, however, that I need to notify them if I will be making large withdrawals anywhere overseas except Merida, where I now live).
You can usually advise the bank via their website rather than phoning them. Unfortunately, even if you notify the bank, you may find that they will cut you off sometimes.
While getting the bank to unblock the card can occasionally be a pain in the neck, I am glad banks are diligent. Twice on the road, my bank found fraudulent charges on my credit cards, and the bank saw the problem before the charges hit my account.