Travel and Money: Using Your Credit Card on the Road

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Your next vacation won’t happen without money…both prior to and during your trip. But with currency conversion discrepancies, high surcharges, and the risk of theft or loss, managing your money on the road isn’t as simple as you may think. This Travel and Money series discusses various ways to address your money issues while you are abroad.

Today we will discuss using your credit card on the road. There is no denying that credit cards are very necessary for travel, as they’re often required to book travel arrangements (like flights and accommodation) in advance. They’re also incredibly convenient and useful — but must be used correctly, and with caution. I don’t recommend charging any travel expenses to your credit card if you don’t have the ability to pay it off (in full) immediately. The massive interest rates alone make no financial sense, and can put you in financial strife if you come up against an emergency and have no cash and a maxed out card.

Having said that, my credit card is one of the most useful travel tools I have. (See also: 5 Best Travel Reward Credit Cards)

Credit Card Advantages

Despite some challenges I’ve had, credit cards are my preferred way to pay for everything while traveling for a number of reasons:

• It provides a detailed record of my purchases
   
• The currency conversion surcharges are reasonable (although rates vary with different credit cards)
   
• If my card or identity is stolen, I am usually not liable for the erroneous purchases
   
• I get some automatic travel insurance coverage by charging flights and car rentals
   
• The frequent flyer miles help to fund further travels

Credit Card Precautions

But using a credit card on the road isn’t all roses and cherries. Here are some things to be aware of:

• If you use your credit card for cash advances, interest is charged from the date of withdrawal (instead of after 30 days as with regular purchases).
   
• Depending on the credit card,currency conversion surcharges can vary as much as 10% between the best and worst cards. Take care to read the fine print.
   
• Some merchants charge extra for using credit cards — up to 10%. The last time I was in Mexico, for example, almost every merchant charged exorbitantly for me to use my card. (In this case I used my debit card at the ATM to withdraw cash instead).
   
• In dodgy countries or areas, it’s not unheard of for vendors to “double-swipe” your card or record your number for later use. Don’t let your card out of your sight, and insist on a receipt.
   
• Some merchants will give you the option of charging the purchase in your home currency. Usually it’s best to decline the offer (and you can do so), because they tend to use less favorable conversion rates, and your credit card will sometimes still levy the foreign currency surcharge. This can cost you up to an additional 6% over simply charging the expense in the local currency.
   
• Although it may seem convenient, resist the urge to use your credit card for long distance calls with a payphone! Twice I was in a jam at an airport and made extremely quick calls, and was charged up to $150 for less than five minutes of conversation. Consider yourself warned!

Using Your Credit Card Abroad

Here are a few things you should take care to do if you use your credit card abroad:

• Call your credit card company before you leave for your trip to advise them of your travel plans. Otherwise, if they see purchases coming from out-of-town, they may freeze your account in suspicion of the card having been stolen. Although sometimes they freeze the account despite your advisory, they’ll almost certainly freeze it if you don’t give them the head’s up.
   
• Check your statements religiously. Go through every expense on your credit card statement each month, to ensure all the charges are legitimate and accurate. If you see any discrepancies, call the credit card company right away. Later in this series, we’ll discuss the best way to view your statements online and pay your bills securely.

Rewards Cards

As I said earlier, one of the perks of using my credit card to charge my expenses is in the accumulation of frequent flyer miles. But there are a number of different types of credit cards rewards programs.

Other articles in the Travel & Money series:

• Using Your Debit Card on the Road
• Using Prepaid Travel Cards
• How to Get and Carry Cash Safely and Securely
• Carrying Decoy Wallets
• Passport Carrying Tips

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